The Changing Face of Retirement - Aegon N.V....young workers face unprecedented inancial challenges....
Transcript of The Changing Face of Retirement - Aegon N.V....young workers face unprecedented inancial challenges....
The Changing Face of Retirement The Young Pragmatic and Penniless Generation
Contents
Foreword 1
Summary 2
Introduction 5
The survey 7 Part 1 Young people at risk in an uncertain world 7 Part 2 The savings outlook of young employees 12 Part 3 What is holding young employees back 18 Part 4 Creating the right conditions for young employees to save 21
Recommendations Enabling young workers to save 27
Glossary 30
About Aegon Transamerica Center for Retirement Studiesreg and Cicero Consulting
Acknowledgements
References and notes
Appendix 1
32
33
34
36
37 Appendix 2
The Aegon Retirement Readiness Survey 2013
Foreword The Changing Face of Retirement The Young Pragmatic and
Penniless Generation sets forth some of the key challenges facing
young adults as they seek to balance their immediate financial
pressures with the goal of planning for retirement The sur vey
was based on 10800 employees in 12 countries worldwide and
included 2722 employees between the ages of 20 and 29
With over half of young people today expecting to be worse off
in retirement compared to their parentsrsquo generation the current
generation of people in their twenties find themselves faced with
particular challenges in saving for later life
We are all living through a period of rapid and unprecedented
economic and social change Nowhere is this change felt more
than among young adults who are whether they realize it or not
forging a brave new world one which is highly educated high
tech and well traveled Yet in this world of new opportunities
many young people are financially stretched The ongoing global
economic downturn has created a highly uncertain financial
outlook with historically high levels of youth unemployment
and personal debt (particularly student debt) and competing
pressures on young adults to establish themselves in the world
of work while starting a family and planning for the long-term
At the same time governments and employers are busy
introducing pension reforms which place greater financial
responsibilities on younger people to fund their own retirement
Faced with this challenge our research finds that the aspiration
to save for retirement remains surprisingly strong for employees
in their twenties One quarter are saving already and almost half
would like to begin As the squeeze on household incomes places
constraints on their ability to save it is necessary to improve
access to retirement products preferably with clear tax benefits
and to better financial education and advice Likewise the
retirement system itself must address the increasing pragmatism
of young people who favor a more flexible transition into
retirement which strikes a balance between work and leisure
The role for governments employers and the retirement savings
industry is to put in place the right conditions to ensure that such
constraints are overcome and retirement aspirations are realized
It is our hope that the insights gained from the Aegon Retirement
Readiness Sur vey 2013 will contribute toward retirement
solutions which better fit the ever-changing lives of young adults
Marc van Weede Executive Vice President Head of Sustainability Aegon NV
Catherine Collinson President Transamerica Center for Retirement Studies
Mark Twigg Executive Director Cicero Group
1 | The Young Pragmatic and Penniless Generation
Summary Todayrsquos world is changing rapidly The pace of change is felt by none more than the twentysomething generation whose world has been transformed by developments such as the Internet the rise of social media the onset of affordable air travel and the rapid expansion of higher education Furthermore economic growth in developing markets has transformed the opportunities and outlook of millions of young people in what were once low-income countries particularly in China one of our survey countries
The Young Pragmatic and Penniless Generation | 2
Opportunities and obstacles Young employees are realists in a changing world This changing world presents young people with many Working adults between the ages of 20 and 29 expect to
opportunities but also with uncertainties and obstacles which be worse off financially in retirement than their parents (59)
impact their financial planning and long-term financial security and take on more financial responsibility including funding their
Cast-iron government and employer retirement benefits are own retirement Additionally 37 believe that they will likely
less prevalent than before and have given way to a more fall short of their retirement needs Furthermore 27 believe
individualistic approach based on personal responsibility that their retirement shortfall will be large at least half of what
In an uncertain labor market employment is less secure Todayrsquos they estimate they will need in retirement As a result 44 are
employees switch employers take career breaks and undertake pessimistic that they will not be able to choose when to retire
periods of self-employment or contract work A steady salary a luxury enjoyed by many of their parents Another factor is the
progression has become the exception rather than the rule financial impact of caring for the older generation with 28
Major life goals such as education funding and home ownership expecting to provide financial support for retired parents
are more costly and harder to achieve than in previous and 40 agreeing that lsquoadult children of retirees should
generations and also compete with retirement funds In this help provide financial support for their parents if neededrsquo
new reality there is a clear role for employers and retirement
providers supported by government to embrace young Forecasts support such pragmatism Today the average
employeesrsquo willingness to take control of their financial future retirement age is around 63 years but by 2050 when those
in their twenties today will be entering retirement the official
Key findings retirement age of many countries will be an average of
The Changing Face of Retirement The Young Pragmatic 67 to 68 years due in part to increased longevity an aging
and Penniless Generation reveals a retirement shortfall for workforce and receding government benefits In addition
employed young adults between the ages of 20 and 29 that youth unemployment is at historically high levels In Spain this
is due to a lack of opportunity to save rather than a lack of stands at 53 for 15 to 24 year olds the highest of our survey
will A range of uncertainties and obstacles some driven by life countries followed by Hungary (28) and Poland (27)
stage many generationally unique conspire to make saving for
retirement harder today than it was for older generations Young employees are ready to do what it takes to save for Young employees recognize these challenges and are prepared their retirement to take responsibility for the solution To do this they require A surprising and encouraging two-thirds of young employees are
employers retirement providers and governments to provide committed to or have the ambition to save for their retirement
suitable financial expertise knowledge and products A core 25 of young employees are habitual savers who lsquoalways
make surersquo that they are saving for retirement and a highly
encouraging 41 of young employees are lsquoaspiringrsquo savers
who intend to save Furthermore the need to save is widely
recognized ndash 57 of young employees believe that retirement
savings are important but not a priority for them at the moment
Taken together these findings suggest that many young
employees are prepared to lsquoownrsquo the retirement problem
having accepted the new reality perhaps more readily than
some older employees
3 | The Young Pragmatic and Penniless Generation
Aspiring savers unable to meet their savings goals can be Young employees can meet their retirement goals and turned into habitual savers with better educational support aspirations with access to flexible financial products which advice and information suit the life they lead The survey reveals that a significant percentage of younger Todayrsquos young employees require flexible savings products
employees (47) do not know if they are on course to achieve such as more portable retirement benefits and other workplace
their desired retirement income ndash a lack of insight into the savings offerings which move with them between employers
future which may contribute to savings inertia Addressing and across different life stages Young employeesrsquo employment
this shortfall many young employees express an interest in patterns are different to those of previous generations
financial education and advice Fully 26 say that lsquobetter and The survey revealed that 39 are planning to look for a new
more frequent information about my retirement savingsrsquo would job in the next 12 months compared to 29 of all employees
encourage them to save more for retirement 23 cite lsquoaccess and 31 of young employees are thinking about quitting their
to a professional advisor with personal recommendationsrsquo and jobs At the same time young employees place a high value
22 want lsquofinancial education so I am more aware of what I on occupational benefits with 87 believing a workplace
need to do for myselfrsquo retirement plan with employer contributions would be an
important factor when choosing their next job
Tellingly almost a quarter of young employees (24) cite
friends and family as the most important source of information These dual needs of workplace retirement plans and high levels
in choosing how to save for retirement which suggests that of labor mobility can be resolved with a more flexible range of
employers and professional financial services companies are employer benefits A third (33) of young employees would
either not providing appropriate support or are not providing be encouraged to save for retirement by matched retirement
support in a manner that is perceived to add value to these contributions from their employer Again clarity and insight are
employees Given the severe long-term repercussions themes with 24 stating that access to simpler investment
of poor retirement readiness it is essential that employers products would increase their propensity to save Finally there
and retirement companies make haste in filling this gap is a leading role for government to play through the creation of
stable long-term financial and taxation policy Among young
employees 34 stated that more generous tax breaks on
long-term savings and retirement plans would encourage
them to save
The Young Pragmatic and Penniless Generation | 4
Introduction Todayrsquos twentysomethings are young but hardly carefree At a time in life when previous generations built a career and laid the foundations for a secure future many of todayrsquos young workers face unprecedented financial challenges Student debt uncertain employment prospects high housing costs the potential support of elderly parents and receding government retirement benefits are just a few of the economic and financial uncertainties that undermine their ability to plan and save for their retirement At a time in life when savings have the longest time horizon for growth these challenges work against young workersrsquo future retirement readiness
5 | The Young Pragmatic and Penniless Generation
The structure and methodology of this report specialized public policy interventions Thus the research reflects
The Young Pragmatic and Penniless Generation polled employees views of the mainstream working population
and retirees in 12 countries Canada China France Germany
Hungary Japan the Netherlands Poland Spain Sweden the A guide to this report United Kingdom and the United States These countries were The reportrsquos conclusions and recommendations flow from an
selected on the basis of having distinctive retirement systems examination of todayrsquos young employees in the context of older
as well as varying demographic and aging trends i and retired employees
bull Par t 1 of this report explores the financial pressures that Respondents were interviewed using an online panel survey young people face from unemployment intermittent
in their native language ii in January and February of 2013 employment and extended full-time education
The sample comprised 10800 employees including 2722 people bull Par t 2 reviews the savings outlook including young employeesrsquo between the ages of 20 and 29 and 1200 retirees The 12 attitudes toward saving expectations for retirement income
countries surveyed represent employees who cumulatively have and retirement age and perceived responsibilities toward
access to around 85 of the worldrsquos private retirement assets iii parent care
(excluding government retirement benefits) bull Par t 3 examines some of the potential savings obstacles such as household economics and the income position of
Issues covered included attitudes toward retirement the individual employee and the importance of advice and
preparedness the role of government and employers in the education in altering youth perceptions of financial priorities
provision of retirement benefits and the impact of the financial bull Par t 4 explores how to encourage young people to save and crisis on attitudes to investment risk and retirement planning the role of employers in this
The survey did not include the self-employed unemployed
or long-term incapacitated since each of these groups faces The final part sets out recommendations for improving the
specific retirement planning challenges which may require retirement readiness of this important group within society
The Young Pragmatic and Penniless Generation | 6
Part 1 Young people at risk in an uncertain world As societies enjoy the benefits of longer life expectancy people will need to work harder to secure a comfortable retirement This will mean saving more during working life and a redefinition of how to approach retirement When it comes to achieving this important life goal however some groups are more at risk This report examines one such group in detail young employees at the beginning of their working life
7 | The Young Pragmatic and Penniless Generation
Countr y Median Income
lsquo(nearest 000) Married Undergrad degree or more Dependent children (any)
All 20-29 year olds $27500 25 53 25
Netherlands $37000 17 39 20
Germany $38000 33 18 27
Sweden $39000 16 30 32
United Kingdom $48000 24 53 24
France $28000 23 66 26
Spain $23000 13 54 25
Poland $13000 38 57 28
Hungary $6000 31 34 16
United States $43000 26 58 27
Canada $51000 36 55 27
China $18000 31 89 30
Japan $37000 12 63 11
Who are younger employees are also more likely than average to be single and much less
This report defines younger employees as people between likely to have children A quarter are married compared to an
20 and 29 years of age a group that belongs to the Millennials average of 64 for the generation now in their 50s
generation born between 1980 and 2000 This group differs
widely among countries although there are clear trends Education levels vary across the countries included in this research
Many have been in the labor market just a few years after a long due to differences in higher education systems (Chart 1) Overall
period of higher education Unsurprisingly median household those aged 20-29 were more likely than the average respondent
incomes are lower around $27500 according to this research to have at least an undergraduate degree The increasing
compared to an overall median of $46000 Twentysomethings prevalence of education has both positive and negative impacts
Chart 1 A portrait of younger employees Q Which of the following reflects your annual household income before taxes
Q What is your marital status
Q Please choose from the following list the highest level of educational or professional qualification you have
Q How many children do you have who are financially dependent on you Please include all children and stepchildren
Why are young people at risk Such changes will not be achieved easily in the current climate
Todayrsquos young people face a challenging set of circumstances The global financial crisis of 2007-8 not only created a need
An aging society means fewer employees supporting more for long-term structural retirement reforms it also led to the
retirees which is profoundly affecting how societies fund more immediate menace of historically high levels of youth
retirement In most of the countries surveyed lsquotraditionalrsquo unemployment The International Labour Organization (ILO)
retirement provision such as government retirement benefits estimated that in 2013 unemployment affected 73 million young
and other forms of social security or employer-sponsored people aged 15-24 worldwide representing more than 126
retirement arrangements like defined benefit company of all young people iv Across the EU 228 of people under 25
retirement plans are already subject to long-term reforms were unemployed in 2012 and in Spain the figure was 53 v
These reforms will reduce the value of future entitlements It is worth noting that the study is conducted among those who
by lowering retirement income benefits and raising the age are currently employed (part- or full-time) so the findings do not
of retirement and are likely to begin to take full effect from fully take into account the significant number of unemployed
the middle of this century just as the current generation young people
of twentysomethings enters retirement Consequently the
retirement prosperity enjoyed by todayrsquos Baby Boomers will not
be shared by subsequent retiring generations unless there is a
major change in their savings behavior
The Young Pragmatic and Penniless Generation | 8
13
4
16
3
Chart 2 Youth unemployment in 2005 and 2012 across Aegon survey countries (excluding China)
60 1
24
14
3
2005 2
06
2012
23
8
45
15
2
81
19
4
30 2
81
86
79
15 9
4
95
37
8
0 2
65
y
Japan
Spain
19
7
Canad
a
Fran
ce
Poland
Germ
any
Hunga
r
Sweden
OECD tota
l
Nether
lands
53
2
United S
tate
s
United K
ingdom
22
Note Youth unemployment rate of youth labour force (age 15 - 24) vi
23
7
12
2
21
11
3
16
2
The problems of high levels of youth unemployment and economic uncertainty affect those with jobs as well as those without
as they breed lower levels of job security and downward pressure on wages They also have a significant impact on the psychology and
confidence of younger people including those in work and their confidence in their short-term and retirement finances As the survey
findings reveal most young employees expect to find themselves worse off than their parentsrsquo generation when they enter retirement
(Chart 3)
Chart 3 The majority of young employees believe that they will be worse off in retirement compared to their parents Q Do you think that future generations of retirees will be better off or worse off than those currently in retirement
Base 20-29 year olds
Donrsquot knowBetter off
8 13
Total Respondents
2722
20 About
the same
59
Worse off
9 | The Young Pragmatic and Penniless Generation
Another major influence on the ability of young employees to save for retirement is the growth of higher education One positive
is that college graduates are more likely to benefit from lower unemployment rates fare better during economic downturns and
experience higher incomes across their lifetime supporting aspirations like home ownership vii and helping to sustain long-term
savings and increased levels of retirement preparedness (Chart 4)
Chart 4 Graduates are likely to enjoy a greater sense of retirement preparedness Q Thinking about how much you are putting aside to fund your retirement are you saving enough
Base All lsquovery prepared for retirementrsquo
30 27
17 16Postgraduate degree or qualification
College degree University degree Some college or trade school
8 High school graduate
1 Below high school graduate Other
Conversely full-time education delays entry into the labor Why is this group of young employees important arket causing a loss of several years of full-time earnings By the middle of the century todayrsquos 20-29 year olds will
otential Moreover ballooning levels of student debt may have led the world economy through an economic recovery
ignificantly delay the onset of post-graduation saving and dramatic demographic shifts during a period of greater
etween 2004 and 2012 for example student debt in the uncertainty for modern retirement systems and other issues
nited States tripled to $966 billion nationwide The effect In developing countries such as China this group will be more
f this is that todayrsquos younger employees must take greater affluent than their parents but still need to deal with the
ersonal responsibility for their savings a challenge in the consequences of a rapidly aging population and an economy
urrent economic and financial circumstances which has passed its phase of rapid growth
For all of their challenges however this group of young people
represents the biggest opportunity to change societal savings
behaviors for the better The Aegon Retirement Readiness Survey
2013 provides insights into how best to achieve this through a
greater understanding of the grouprsquos outlooks and savings habits
m
p
s
B
U
o
p
c
The Young Pragmatic and Penniless Generation | 10
45
29
20
6
50
24
21
6
56
19
21
4
46
27
21
6
Better off About the same
Worse off Donrsquot know
All work
ers
20-29 ye
ar old
s
Male 2
0-29 ye
ar old
s
Fem
ale 2
0-29 ye
ar old
s
Chinarsquos young employees bucking the gloomy trend optimistic that their economy will continue to expand over
A key finding of this yearrsquos Aegon Retirement Readiness the next 30 years Concerns about the sustainability of
Survey is that Chinese employees are far more confident growth remain however Just 37 of Chinese 20-29 year
and optimistic about their financial future than employees olds believe that the Chinese economy will improve over
in other countries This is also true of younger employees the next 12 months ndash indeed 2013 will see the economyrsquos
Of those Chinese aged 20-29 half (50) believe that they slowest expansion since 1990 x Long term Chinarsquos rapidly
will be better off in retirement than those currently in aging population makes creating a comprehensive and
retirement Younger Chinese men are the most optimistic sound retirement system an urgent priority xi Coverage has
with 56 believing that they will be better off expanded in the past 10 years with reforms such as the
introduction of the Enterprise Annuity in 2005 yet it is still
This optimism is relatively justified Since 1980 Chinese GDP not clear how China will build a universal retirement system
per capita has increased thirty-fold from $193 to $6091 across both the government-sponsored and private sectors
in 2012 viii While this dramatic increase has not benefitted However the success of reforms carried out to date suggests
all Chinese equally ndash by the Chinese governmentrsquos measure that tax incentives and efforts to improve awareness are
99 million rural Chinese live in poverty ix ndash huge progress required as part of any long term solution
has been made and young people in China are generally
Chart 5 Chinarsquos younger employees are confident of a better retirement Q Do you think that future generations of retirees will be better off or worse off than those currently in retirement
Base Respondents in China
11 | The Young Pragmatic and Penniless Generation
Part 2 The savings outlook of young employees This chapter explores the financial behaviors and savings gaps and needs of 20-29 year olds through their attitudes toward financial issues the wider economy and the savings required for a comfortable retirement
The Young Pragmatic and Penniless Generation | 12
75
21
4
69
27
4
64
31
4 5
7
36
7
20-29
30-39
40-49
50-59
44
40
16
NET Low Index (0-5)
NET Medium Index (6-7)
NET High Index (8-10)
60-69
Retirement readiness and young employees However many young employees have concerns about achieving
Retirement is seen as a major life stage by young employees this Over a third (38) are pessimistic that they will not have
They typically expect to spend an average 20 years of their lives enough to live on in retirement and 44 are pessimistic about
in retirement a definition of retirement that is consistent across being able to choose when they retire Furthermore 28 have
all working age groups Retirement conjures broadly positive made no plans at all for their retirement which may help explain
associations Fully 63 of employees in their twenties aspire some of these concerns Health worries are less of an issue with
to travel during retirement 39 see it as a period of leisure 52 being optimistic that they will enjoy good health in old age
and 30 associate it with freedom The need to plan and save although 20 believe that they will not which is perhaps related
for this phase of life is also widely accepted Half (50) of to the 17 who associate retirement with ill health in general
employees in their twenties are aware of the need to save and
64 feel a high or very high degree of personal responsibility Overall 75 of employees in their twenties achieved a low
to ensure sufficient income for retirement retirement readiness score of 0-5 on the Aegon Retirement
Readiness Index (please refer to the glossary and Appendix 1 for
an explanation of the Index) The percentage of employees with a
low score of 0-5 drops with each increase in age group and is 44
among those in the lsquoat retirementrsquo group of 60 to 69 year olds
Chart 6 Aegon Retirement Readiness Index scores for employees across age groups For more information on the ARRI see page 36
Base All aged 20 - 69
Life stage and savings attitudes Getting married and starting a family are two such events
he Retirement Readiness Index reveals that retirement Of employees in their twenties 25 are married and
reparedness is to some extent age- and life stage-related 25 have children whereas for those in their 30s 54 are
hart 6) For younger employees the idea that retirement is married and 56 have children representing a major shift
r awayrsquo combined with lower earnings and other spending toward parenthood
riorities (such as higher education or purchasing a house)
an be powerful obstacles to saving for retirement Thus while Encouragingly while young employees are less likely to
5 of all employees say that they lsquoalways make surersquo that they have started saving for retirement many see themselves as
re saving for retirement just 25 of 20-29 year olds do so future lsquoaspiringrsquo savers Fully 41 intend to save in the future
t present over half (57) of 20-29 year olds are not saving compared to 27 of all employees and only 7 do not intend
r retirement compared to 46 of all employed adults to save for retirement This large group of aspiring savers
ven in China where 44 are always saving for retirement who are committed to the idea of putting money aside for
st 32 of 20-29 year olds do so retirement challenges the view that young people are unwilling
to save Furthermore since converting these young employees
his life cycle effect can be seen in numerous ways At the from aspiring savers to regular savers may depend on the
utset of adult life employees experience lower income and right economic conditions and appropriate financial incentives
igher spending as they prioritize and fund life events with a helping them is a major opportunity for governments and
ignificant impact on their ability or desire to save for retirement employers
T
p
(C
lsquofa
p
c
3
a
A
fo
E
ju
T
o
h
s
13 | The Young Pragmatic and Penniless Generation
35 25 20 19 12 9 27 41 7 7
I always make sure I only save for I am not saving for I am not saving for I have never saved that I am saving retirement occasionally retirement now although retirement though for retirement and for retirement from time to time I have in the past I do intend to donrsquot intend to
All 20 to 29 year olds
NET Low Index (0-5)
NET Medium Index (6-7)
NET High Index (8-10)
Chart 7 Younger employees are much more likely to aspire to save for retirement but the majority are not saving Q Which of the following best explains your approach to saving for retirement This can include money you contribute to any
long-term investment including pensions stocks and shares investment-linked insurances property etc
Other findings support the assertion that younger savers This can be seen in Chart 8 More 20-29 year olds claim that
are open to increasing their retirement savings Over a third they are not likely to be saving for retirement by any means
(37) of 20-29 year olds feel lsquovery responsiblersquo for ensuring (17 against 12 for all adults) and are generally less likely
a sufficient retirement income Note however that this does to use any of the savings products mentioned Revealingly
not translate into better developed financial plans and savings 20-29 year olds are far less likely to name lsquogovernment benefits
strategies Only 7 in this age group feel they have lsquowell in retirementrsquo as a source of retirement income although almost
developedrsquo personal retirement plans and 33 say they are all respondents have some such entitlement This may be due
lsquohardly saving anythingrsquo for retirement Clearly awareness of the to unawareness of government benefits and or greater
retirement situation does not translate into actual retirement scepticism about governmentsrsquo ability or willingness to
planning activity provide for them in old age
The Young Pragmatic and Penniless Generation | 14
Chart 8 Younger people are more likely not to be using any means of retirement savings Q Which financial means if any are you currently using to prepare for your retirement
33 Savings accounts 31
36 Government pension social security 24
25 Defined benefit plan 21
22 Private pension 17
23 Defined contribution plan 15
20 Life insurance 15
14 Stocks 10
14 My home 9
12 Mutual funds 8
9 Inheritance 7
9 Bonds 7
8 Investment property 7
5 Employee stock purchase 5
5 Investment insurances (annuities) 4
4 Long-term care insurance 4
6 Annuities 3
My business 2 3
Reverse mortgage 1 1
Other 3 2
12 None nothing 17
6 Donrsquot know 10
All 20 to 29 year olds
Leisure
Freedom
Far away
Insecurity
Enjoyment
Poverty
Ill health
Boredom
Opportunity
Dependent on others
Loneliness
Tired
Excitement
None of the above
Donrsquot know
Retirement associations What does the younger generation feel about retirement and want to get out of it Perhaps unsurprisingly 20-29 year olds are more
likely to be negative than older respondents associating retirement with boredom loneliness and ill health They are also far more
likely to believe retirement is lsquofar awayrsquo which is likely to be a barrier to retirement saving
15 | The Young Pragmatic and Penniless Generation
Chart 9 The younger generation has more negative associations with retirement Q Which if any of the following words do you most associate with retirement
44 Leisure 39
36 Freedom 30
17 Far away 26
25 Insecurity 25
25 Enjoyment 21
19 Poverty 19
15 Ill health 17
9 Boredom
13
16 Opportunity
13
10 Dependent on others
12
9 Loneliness
11
0
r olds
7Tired
1
6Excitement
6
2None of the above
1
2Donrsquot know 2
All 20 to 29 yea
Aspirations and responsibilities for retirement Income levels in retirement ung people have similar retirement aspirations to the general A high proportion (47) do not know if they are on course
pulation for example travel (63) spending time with to achieve their retirement income goal Combined with the
iends and family (61) and pursuing new hobbies (52) high level of financial responsibility young employees expect
r them however retirement also includes the responsibility of to assume in retirement it is clear that people not only need
ring for others Two-fifths (40) believe that lsquoadult children to build much greater awareness of what kind of financial
retirees should help through providing financial support to pressures they are likely to face in retirement but also require
eir parents if neededrsquo and 28 believe that this will affect greater support in establishing realistic retirement income
em directly in retirement through providing financial support targets which are capable of meeting their needs
their parents A fifth (21) also expect to spend some of
eir retirement caring for other family members while just
donrsquot expect to provide for anyone compared to 40 of all
ployees Clearly todayrsquos young employees anticipate serious
ancial responsibilities in their retirement
Yo
po
fr
Fo
ca
of
th
th
to
th
30
em
fin
The Young Pragmatic and Penniless Generation | 16
Chart 10 Many young employees do not think that they are on course to achieve target retirement income Q Do you think you will achieve this income [your estimated income needed in retirement]
Base 20-29 year olds
Yes I am on course to achieve my retirement
income
16
47
12
16
10
I donrsquot know if I am on course to achieve my
retirement income
No I am on course to achieve around
one-quarter (25) of
No I am on course to achieve around half of my
retirement income
No I am on course to achieve around
three-quarters (75) of my retirement income
532
China
586
Japan
United S
tate
s
628
Poland
635
Canad
a
636
Hunga
r
638
y
Fran
ce
645 647
Spain
Sweden
649
United K
ingdom
651
Germ
any
653
Nether
lands
666
my retirement income
When will young people retire Media reports about the need to raise the age of retirement appear to have influenced younger employees Fully 44 of 20-29 year
olds do not expect to be able to choose their retirement date although the younger generation do expect to retire at a similar age
to older employees 63 This varies considerable by country In the Netherlands young employees expect to retire eight years later
than those in Japan Some countries such as China and Japan have surprisingly low expected retirement ages suggesting that young
employees may benefit from having a better understanding of when government or workplace retirement benefits kick in
Chart 11 Young people in most countries expect to retire before 65 Q At what age do you expect to retire from all paid employment
Base 20-29 year olds
Despite expecting to retire at the same age as their parents younger employees are more open to a transition into retirement
reflecting their more flexible outlook toward work Around half (51) are happy to change the way they work in some way as they move
into retirement Just 8 expect to keep working as they do currently
17 | The Young Pragmatic and Penniless Generation
Part 3 What is holding young employees back Insights into what young employees feel is holding them back from saving or saving more can be used to encourage younger people to adopt more positive savings behaviors This chapter explores the attitudes of young employees toward the financial obstacles they face and asks what actions they have taken in preparation for retirement The findings reveal that while the majority lacks adequate planning for their retirement needs financial shortcomings are only part of the stor y Spending preferences play a key role in the savings gap of advanced economies
The Young Pragmatic and Penniless Generation | 18
Lack of money to invest 37
16 The uncertain economic environment
7 Fear of poor investment returns over the coming years
6 I donrsquot trust the financial services industry
6 I donrsquot know how to go about investing for the long-term
4 oncerns about unstable currencies currency fluctuations
4 Complexity of investment products
4 I canrsquot afford to take financial advice
3 The fees charged by financial services companies
3 I donrsquot see the need to save for the long-term
Other 2
Donrsquot know 8
A pay rise
More generous tax breaks on long-term savings and pensions products
A better retirement plan pension match from my employer
Better and more frequent information about my retirement savings
Simpler investment products that I can understand with less jargon
Access to professional financial advice so that I have personalized recommendations on what steps I need to take
Access to financial education so that I am more aware of what I need to do for myself
Better legal protection in case I am sold the wrong product
Other
Not applicable - I already have sufficient savings
Donrsquot know
Obstacles and incentives to saving
Chart 12 Younger employees feel they donrsquot have money to invest for retirement Q What is the single biggest obstacle to you saving for retirement right now
Base 20-29 year olds
C
What is the single biggest obstacle preventing twentysomethings that they rank pressing and desirable life goals such as marriage
m saving for retirement Not having enough money to invest starting a family vacations and other leisure activities above the
top of the list cited by over a third (37) although this figure need to plan for retirement This suggests the savings gap is
ops to just 6 in the emerging market of China where mean preference-driven
omes are the lowest by far ($18000) suggesting that lack of
sh may be partly a state of mind Young employees in China The biggest obstacle to retirement savings cited by one-eighth
actually more worried about local concerns such as economic (13) of respondents is either not knowing how to invest for the
certainty (29) and currency instability (15) Behavioral long-term or the complexity of investment products charges and
ance has an impact too with the way young employees frame fees Ready solutions to this include improving young employeesrsquo
eir financial priorities creating its own obstacles to saving financial literacy about retirement planning and creating easier
many as 57 of 20-29 year olds believe that saving for access to professional financial advice
tirement is important but not a current priority suggesting
fro
is
dr
inc
ca
are
un
fin
th
As
re
19 | The Young Pragmatic and Penniless Generation
Chart 13 More money would incentivize young employees to save for retirement Q Which if any of the following would encourage you to save for retirement
Base 20-29 year olds
57 A pay rise
More generous tax breaks on long-term savings and pensions products
34
A better retirement plan pension match from my employer
33
Better and more frequent information about my retirement savings 26
Simpler investment products that I can understand with less jargon 24
Access to professional financial advice so that I have personalized recommendations on what steps I need to take 23
Access to financial education so that I am more aware of what I need to do for myself 22
Better legal protection in case I am sold the wrong product 16
Other 2
Not applicable - I already have sufficient savings 2
Donrsquot know 10
Chart 14 Very few younger employees have a written plan for retirement Q Which of the following best describes your retirement planning strategy
Base 20-29 year olds
5 Donrsquot know I have a
written plan
8
34 I have a plan but it is not
52 written down
I do not have a plan
Turning to incentives greater remuneration predictably tops a list Retirement planning of what would encourage 20-29 year olds to save for retirement Retirement planning is essential to adequate retirement saving
More tellingly a third (33) would like their employer to provide although it is somewhat lacking in todayrsquos younger employees
a better retirement plan into which both parties contribute Over half (52) have no retirement planning strategy at all
Better information and simple products would also help more and only 8 have noted down their retirement strategy
people to save A quarter (26) would be encouraged to save by
better and more frequent information about retirement savings Nevertheless the respondents polled believe that the current
while a similar number (24) want simple investment products global economy makes retirement planning increasingly
that are easy to understand As with the previous question a important ndash 71 agreed with this statement It is clear from this
lack of investment knowledge and the complexity of investment that young people between the ages of 20 and 29 do not lack
products are revealed as obstacles to savings the will to save they lack the opportunity
The Young Pragmatic and Penniless Generation | 20
Part 4 Creating the right conditions for young employees to save How may young employeesrsquo obstacles to saving be overcome For retirement readiness this will be a defining question of the early twenty-first centur y ndash and an extremely challenging one given the number of serious issues affecting younger employeesrsquo finances What was learned in the previous chapter about encouraging young employees to save is a start This chapter examines which areas and triggers to saving can be unlocked and whether government employer or individual should take most responsibility
21 | The Young Pragmatic and Penniless Generation
Friends and family
Professional financial adviser
17
24
Bank adviser 9
Personal finance websites online retirement planning tools
My employer
Government website
4
8
7
Insurance agent spokesperson
Accountant
3
3
Personal finance media 3
Lawyer
Bank website
3
2
Insurance company website
Donrsquot know
2
15
Information and advice on retirement saving strong theme revealed by our findings is that younger This finding is remarkably consistent across the countries
mployees want more information on savings products and sur veyed despite significant differences in market makeup
etter access to advice The largest share 24 (compared although some differences exist For instance a quar ter
o 17 for all employees) finds friends and family to be the (25) of young employees in France turn to bank advisers
ost important source of advice followed by professional for financial information nearly triple the number among all
dvisers (17) and bank advisers (9) That young employees young people (9)
urn to friends and family first suggests an unmet need for
rofessional financial advice This is both a challenge and an
pportunity for the financial ser vices sector
hart 15 For young employees friends and family are the leading source of retirement savings information Which of these sources (of information) is most important to you
ase 20-29 year olds
A
e
b
t
m
a
t
p
o
CQ
B
What is the role of the workplace in retirement planning Does this influence what retirement benefits younger
In response to shifting employment patterns todayrsquos younger employees expect from their workplace Certainly a majority
employees are less loyal to their employers than older workers favor workplace retirement plans with 61 believing that these
Fully 39 of 20-29 year olds are planning to look for a new job should be a fundamental part of pay (although this is lower
in the next 12 months compared to 29 of all workers and than for employees overall) and just 4 feel that retirement
31 frequently think about quitting their jobs Strikingly while planning should be left entirely to individuals
53 of all workers plan to stay with their current employer
until retirement just 37 of 20-29 year olds say this However there is evidence of a slight shift in perceptions
Younger workers are less likely to want workplace retirement
Doubtless much of this is because younger workers are more plans over other factors Of those who want employer
mobile and have more opportunities Another trigger to lower retirement plan contributions only 46 wanted this even if
employer loyalty may be the expectation of holding more jobs it reduced benefits and 35 (compared to 43 of all workers)
and even pursuing multiple careers over a working lifetime if it cut jobs
The Young Pragmatic and Penniless Generation | 22
Donrsquot know Employers should be
required to contribute to workersrsquo pensions
5 Nothing ndash it should be left to the government to take 18
care of its citizens 28
4 Nothing ndash it should be left to individual employees to
take care of themselves
13
22
Employers should provide a range of flexible benefits
and allow individuals to choose which benefits they
actually want
10 Employers should
be required to make a pension available but not
to contribute into it
Employers should not be required to provide pensions but should
provide information on how to plan for retirement
Chart 16 Most young workers feel that their employer should provide some kind of pension Q In the future what if anything should employers do to help people plan for retirement
Base 20-29 year olds
Are other workplace benefits more important Younger workers were asked to rate the importance of various workplace benefits The results reveal how highly they value the
elements of their compensation package Chart 17 shows that 87 of young employees believe a workplace retirement plan with
employer contributions would be an important factor when choosing their next job While retirement may be decades away for
twentysomethings 80 believe programs provide for a phased retirement are important
23 | The Young Pragmatic and Penniless Generation
Basic salary 94
93 Holiday entitlement
91 Overtime and bonus pay
91 Location of workplace
88 Medical health insurance
87 Opportunities for career progression
Access to a workplace retirement plan with employer contributions 87
Access to good training provision 86
Flexible working hours 85
Life insurance (death in service benefits) 81
Phased retirement or other employer programs providing for a transition into retirement 80
Ability to work past the normal retirement age 70
Access to a workplace retirement plan without employer contributions
67
Employee stock plans 65
Access to creche help with the cost of childcare 59
Opportunities for foreign travel 50
Company car 43
Chart 17 Workplace retirement plans are a relatively low priority for younger workers when choosing a job How important to you would the following workplace benefits be if you were choosing your next job
ase 20-29 year olds
Q
B
Regarding workplace benefits provided by employers today considered just enough to fulfill basic needs and in China a
young employees are about as likely as all workers to be offered fully formed nationwide retirement system is still some way off
retirement tools such as annual plan statements and online The future shape and affordability of these plans is debated in
tools from their employer though it is concerning that 24 do all of the sur vey countries to var ying degrees
not know if such tools are available or not Those provided are
considered helpful Younger workersrsquo views on reform are important because
changes to government retirement benefits are more likely
The role of government to affect them than any other part of the working population
The generosity of government retirement benefits varies The main concern cited by 57 is of facing less generous
considerably in the countries sur veyed In some countries such government retirement benefits than those enjoyed by their
as France government benefits are the primar y mechanism parentsrsquo generation
for funding retirement while in the United Kingdom they are
The Young Pragmatic and Penniless Generation | 24
The government should reduce the overall cost of state pension provision by
reducing the value of Donrsquot know individual pension plans
25 22
4 The government should not do anything State pension provision will
remain perfectly affordable in the future
28
21 The government should increase overall funding
available for the state pension through
raising taxes
The government should take a balanced approach with some reductions in individual payments and
some increases in tax
Chart 18 Young workers think that the government retirement system will need to be reformed Q With the cost of government retirement benefits becoming a greater concern as people live longer which
if any of the following do you think the government should undertake
Base 20-29 year olds
The younger generation believes that the government cannot What do young employees look for in a retirement product continue to provide as it does now ndash just 4 think government The sur vey findings show that young employees have
benefits will remain affordable to society However there is no reser vations about employer and government retirement
consensus on what governments should do to reform retirement benefits So what then do they want from a private savings
plan systems Over a fifth (22) think retirement entitlements product The savings product feature most valued by younger
should be cut just over a fifth (21) think governments should workers is protection against investment risk (Char t 19)
raise taxes and more than a quarter (28) think a mixture of This may be in the form of no loss of initial investment a
the two is the best solution Another quarter admits that they guaranteed income stream or protection against inflation
donrsquot know what should be done This is reasonable ndash the initial investment of those farthest
from retirement is most at risk However less consideration
is given to savings grow th through investment returns This
suggests that there is an oppor tunity to educate young
workers about the trade-off between returns and risk
management and what they stand to gain
25 | The Young Pragmatic and Penniless Generation
Chart 19 Products which protect against investment risk are the most important to young workers ( interested) Q Thinking about the types of financial products you could purchase to help provide you with security in retirement on a scale of 1 to 5
how interested are you in the following options
Base 20-29 year olds
A product providing a guaranteed retirement income stream or lifetime income in retirement 82
A product which protects my retirement income against inflation 81
A product which guarantees that I donrsquot lose my initial investment 81
A product which helps meet the cost of long-term care if I become unable to look after myself 80
A product which protects my capital from poor investment returns 79
A product which generates a retirement income and allows me to take a lump sum from the investment should I need to 79
A product where the annual management charges are kept low 78
A product which enables me to keep some control over how my savings are invested during my retirement 77
A product which manages the asset allocation so that I am never exposed to a level of risk Irsquom not comfortable with 76
A product which continues to provide a retirement income to my spouse in the event that I die first 75
A product which protects my family against having to pay estate taxes when I die 72
A product which locks in investment returns during the good years 70
The lsquodefined ambitionrsquo retirement system in This removes some of the disadvantages of leaving
the Netherlands a sustainable retirement solution retirement liabilities exclusively up to employers
for young workers (defined benefit) or employees (defined contribution)
In the Netherlands as elsewhere young workers are faced In the Netherlands this is likely to involve legislation which
with an increasing retirement age decreasing government lets retirement funds automatically adjust pay-outs and
suppor t for retirement and declining traditional defined retirement age as life expectancy changes xii
benefit employer retirement plans Reforms proposed
by the Dutch may show a way for ward for all mature and This model has garnered interest elsewhere In the
aging economies United Kingdom Pensions Minister Steve Webb expressed
interest on a more limited scale with a government
rsquoDefined ambitionrsquo proposes that risks are not taken on fully guarantee for a minimum rate of return for defined
by either employer or employee but are shared contribution retirement plans
The Young Pragmatic and Penniless Generation | 26
Recommendations Enabling young workers to save The studyrsquos findings reveal that the majority of young workers (66) are either saving consistently or aspire to start saving but face challenges including debt low pay and funding for significant life events and generational changes to the economic landscape and government and employer support If young people are to achieve a prosperous retirement their willingness to save should be met with better opportunities to save Here is what can be done by employers governments and young people themselves to address retirement planning concerns for younger adults
27 | The Young Pragmatic and Penniless Generation
Individuals Employers and governments
Determine how much income you need in retirement Auto-enroll employees into a workplace retirement plan Young people accept the need to save for retirement but donrsquot If an auto-enrollment workplace retirement plan is feasible
know how to act on that need They can become more retirement this can play a major role in getting young workers saving early
savvy simply by talking to friends and family (as do 24 of and regularly Combined with auto-escalation (the automatic
our respondents already) or employers going online to use annual increase in retirement plan contributions) and matching
retirement calculators or reading the personal finance media contributions it can lead to greater retirement readiness
Seek out a financial advisor Provide more flexible savings products through the workplace Young people are faced with life events that make it easy to Not all savings journeys start with a retirement plan particularly
feel overwhelmed by financial priorities in addition to retirement for young people who may think of retirement as lsquotoo far awayrsquo
planning Soliciting advice from a finance professional early in Employers can kick-start the savings habit in younger workers
life (17 of young employees have done so already) helps with by providing flexible easy to access and easy to understand
planning and priorities and making sense of long-term finances savings plans as a more attractive starter option
Start saving now and save consistently Make company retirement plans more portable As with all employees young people will strengthen their Young people move jobs much more often than previous
retirement readiness simply by saving regularly Today only 25 generations of employees so savings like DC retirement plans
of young people always save yet even small regular amounts need to follow employees when they change jobs
will improve retirement readiness over time
Make tax incentives more effective Ask your employer about workplace retirement savings plans All countries encourage long-term savings through tax relief but
and other retirement benefits young people often arenrsquot aware of this or donrsquot understand it
While one third (33) of young people believe that a workplace A more targeted system of tax relief could help provide clearer
retirement savings plan provides a major opportunity to start and simpler signals to younger people about the financial
saving employers often experience difficulties in engaging benefits of long-term saving
younger employees in discussions about retirement planning
The workplace is an important channel for achieving retirement Make better financial education central to the workplace readiness so be sure to max out on any employer contributions retirement offer
Young people who aspire to save may be prevented from
doing so by setting the wrong financial priorities Workplace
retirement education ndash alongside professional advice ndash can help
guide young people toward the right long-term priorities at an
earlier age in life
The Young Pragmatic and Penniless Generation | 28
29 | The Young Pragmatic and Penniless Generation
Glossary
Aegon Retirement Readiness Index (ARRI) c areer average retirement plan The ARRI assesses the relative levels of retirement A type of defined benefit plan that is based on an
preparedness of employees across different countries on a employeersquos average retirement earnings over the duration
scale from 1 to 10 The Index is based on three questions of plan membership Same as average salary plan
covering attitudes and three questions covering behaviors
defined ambition (DA) plan average salary plan A type of retirement plan in which retirement plan risks
A type of defined benefit plan that is based on an are shared between the employer and the employee
employeersquos average retirement earnings over the duration It offers greater certainty to savers around the final value
of plan membership Same as career average plan of their retirement assets than in DC plans and less
cost volatility for employers than with DB plans In the
a nnuity Netherlands Defined Ambition (DA) retirement plans are
A form of contract sold by life insurance companies that being introduced in order to help relieve the pressure on
guarantees a fixed or variable payment to the annuitant employers while still trying to provide employees with a
at some future time usually retirement All capital in the more secure retirement plan The United Kingdom too is
annuity grows tax-deferred looking at DA retirement plans as a solution
auto enrollment defined benefit (DB) plan An employer-sponsored retirement plan in which the An employer-sponsored retirement plan where the amount
employer is able to enroll an employee without that of future benefits an employee will receive from the plan is
employeersquos express authorization The employer determines defined typically by a formula based on salary history and
what percentage of the employeersquos salary or wages is years of service The amount of contributions the employer
contributed to the plan The employee is able to change is required to make will depend on the investment returns
this percentage and can opt out of enrollment in the plan experienced by the plan and the benefits promised
Contrast defined contribution plan
a uto-escalation A feature of a plan which automatically increases the defined contribution (DC) plan percentage of (retirement) funds saved from salary An employer-sponsored retirement plan such as a 401(k)
This feature generally uses a default or standard plan or a 403(b) plan in the United States in which
contribution escalation rate contributions are made to individual participant accounts
Depending on the type of DC plan contributions may be
B aby Boomers made by the employee the employer or both
A term used to refer to people generally born between
the end of World War II in 1945 and the mid 1960s The employeersquos benefits at retirement or termination of
Other generations Silent Generation - the generation born employment are based on the employee and employer
between 1925 and 1945 Generation X - the generation contributions and earnings and losses on those
born between 1965 and 1979 Millennials or Generation contributions See also 401(k) and 403(b) plan
Y - the generation born between 1980 and 2000 and often Contrast defined benefit plan
classified as the children of Baby Boomers
The Young Pragmatic and Penniless Generation | 30
401(k) plan An employer sponsored retirement plan that enables
employees to make tax-deferred contributions from their
salaries to the plan
403(b) plan An employer-sponsored defined contribution plan that
enables employees of universities public schools and
non-profit organizations to make tax-deferred contributions
from their salaries to the plan
final salary plan A type of defined benefit plan in which retirement
benefits are based on final retirement salary in the years
immediately before retirement benefits are received
Millennials A term used to refer to the people born from about 1980
to 2000 brought up using digital technology They are
often classified as the children of Baby Boomers
r etirement (or pension) plan Provides replacement for salary when a person is no
longer working due to retirement In the case of a defined
benefit retirement plan the employer or union contributes
to the plan which pays a predetermined benefit for the
rest of the employeersquos life based on length of service and
salary Payments may be made either directly or through
an annuity Retirement plan payments are taxable income
to recipients in the year received The employer or union
has fiduciary responsibility to invest the retirement plan
funds in stocks bonds real estate and other assets earn
a satisfactory rate of return and make payments to retired
workers Retirement plan funds holding trillions of dollars
are one of the largest investment forces in the stock
bond and real estate markets If the employer defaults in
the United States retirement plan payments are usually
guaranteed by the Pension Benefit Guaranty Corporation
(PBGC)
variable annuities (VA) An insurance contract in which the insurance company
guarantees a minimum payment at the end of the
accumulation period The payments may vary depending
on the financial performance of the managed portfolio
31 | The Young Pragmatic and Penniless Generation
About Aegon Transamerica Center for Retirement Studiesreg and Cicero Consulting
Aegon Transamerica Center Aegon is an international life insurance pensions and asset reg management company with businesses in over 20 markets for Retirement Studies in the Americas Europe and Asia Aegon companies employ The Transamerica Center for Retirement Studiesreg (TCRS) is
around 24000 people and serve millions of customers a division of the Transamerica Institute a nonprofit private
worldwide foundation TCRS is dedicated to educating the public on
wwwaegoncom emerging trends surrounding retirement security in the
United States TCRSrsquo research emphasizes employer-sponsored
In 2010 Aegon became a founding member of the Global retirement plans issues faced by small to mid-sized companies
Coalition on Aging which seeks to raise awareness of aging and their employees and the implications of legislative and
issues among policymakers and the general public A major aim regulatory changes Transamerica Institute is funded by
of the coalition is to transform the way we think and speak contributions from Transamerica Life Insurance Company and
about aging replacing the familiar rhetoric of lsquoproblemsrsquo with its affiliates and may receive funds from unaffiliated third-
a more positive discussion of lsquopossibilitiesrsquo and lsquoopportunitiesrsquo parties For more information about TCRS please refer to
wwwglobalcoalitiononagingcom wwwtransamericacenterorg
Cicero Consulting A leading consultancy firm serving the banking insurance and
asset management sector Cicero specializes in public policy
and communications consulting as well as global thought
leadership and independent market research Cicero was
established in 2001 and now operates from offices in London
Brussels Washington and Singapore As a market leader in
pensions and retirement research Cicero designed
and analyzed the research and contributed to the report
wwwcicero-groupcom
The Young Pragmatic and Penniless Generation | 32
Marta acebo Mark Green Patricia Plas
Paula alvarez douGlas henck scott roane
Frits bart wendel hoFMan thurstan robinson
Grace basile
lynette belFry
andrew berwick
Frans van der horst
tatsuo kai
herMan kaPPelle
Patti rowey
sarah russell
Joost van schaGen
robin boon Gaacutebor kePecs dick schiethart
bert-JaaP brons Marco keiM erik schouten
douG brooks
libby buet
kent callahan
JaiMe kirkPatrick
bas knol
roGer koch
anGela seyMour Jackson
kate sMith
renske stoker
Jeanne de cervens
dana chen
Peter kunkel
alexander kuiPers
eyleen sun
MartiJn tans
arkadiusz chMurzynski
heidi cho
brian lewis
Mike linder
GreG tucker
Mark twiGG
siMon clow siMon luke catherine wanG
robert colliGnon Jason Ma Marc van weede
catherine collinson GrzeGorz Mathea tiM willaert
wendy daniels
Michel denizot
edit drevenka
Paul Middleton
takaoh MiyaGawa
david Moulton
daniel wriGht
alex wynaendts
MacieJ zaPala
Jan driessen
kelly Fu
adrian Grace
Mark Mullin
Marcelle noltenius
stiG nybo
Peacuteter zatykoacute
vicky zeldin
Disclaimer This repor t contains general information only and does
not constitute a solicitation or offer No rights can be
derived from this repor t Aegon its par tners and any of
their affiliates or employees do not guarantee warrant
or represent the accuracy or completeness of the
information contained in the repor t
Acknowledgements
33 | The Young Pragmatic and Penniless Generation
References and notes i For a comparison of different retirement systems see lsquoPensions at a Glance 2011rsquo OECD 2011 ii As the survey was carried out online the survey results in China are based toward people living in urban areas iii ldquoPensions Marketsrdquo TheCityUK March 2013 p9 iv Global Employment Trends for Youth 2013 A generation at risk International Labour Organisation 2013 p2 v Eurostat July 2013 vi OECD Employment and Labour Markets Key Tables from OECD No 2 2012 vii The Federal Reserve Bank of New York 2012 Quarterly Report on Household Debt March 29 2013 viii World Bank ix lsquoWorld-class povertyrsquo The Economist February 27 2013
httpwwweconomistcomblogsanalects201302chinas-poor x lsquoThe Chinese slow down in char tsrsquo The Economist July 15 2013 xi lsquoChina rsquos welfare system difficult inflexible and blatantly unfairrsquo The Guardian April 23 2013
httpwwwtheguardiancomglobal-development2013apr23china-welfare-system-inflexible-unfair xii lsquo The Dutch experience with Defined Ambition pensions and the impact on companiesrsquo Aegon Global Pensions March 12 2013
httpwwwaegonglobalpensionscomenHomePublicationsNews-archiveNewsThe-Dutch-experience-with-Defined
Ambition-pensions-and-what-that-may-mean-for-companies-in-the-Netherlands-and-the-UK
shy
The Young Pragmatic and Penniless Generation | 34
Contact information HE ADQUARTER S
Aegon NV
PO Box 85
2501 CB The Hague
Telephone +31 70 344 32 10
w w waegoncom
MEDIA REL ATIONS
Telephone +31 70 344 89 56
Email gcc-iraegoncom
Countr y Index score
Germany 548
China 541
Canada 524
United States 519
The Netherlands 488
United Kingdom 486
Sweden 483
France 475
Hungar y 473
Poland 463
Spain 440
Japan 430
Total 489
Appendix 1 Aegon Retirement Readiness Index (ARRI) - technical note
Aegon Retirement Readiness Index (ARRI)-technical note 2013 Weightings (2012 in brackets) A sample of 12000 pre and post retirees was drawn from 1 Personal responsibilit y 20 (30)
twelve countries Of these 10800 (90) were pre-retirees 2 Level of awareness 30 (35)
and these were chosen for fur ther analysis of their plans 3 Financial capability Understanding 30 (25)
for retirement The Index that was developed forms an 4 Retirement planning 50 (50)
assessment of how well an individual perceives the adequacy 5 Financial preparedness 60 (60)
of his her own finances and financial awareness specifically 6 Income replacement 35 (35)
for addressing his retirement needs
Note that the weights devised to show the relative
The lsquotargetrsquo for the Index impor tance of each question in calculating the Index add to
The question on current savings activity was designated as the 225 These were then re-scaled so that a final scale of 1 to
target question (dependent variable) for predicting the level of 10 was calculated
preparedness for retirement Responses to this question were
then correlated with each of the six key questions (variables) Final scores by country below to understand which were driving the activity These weightings were multiplied by the actual scores for each
This was done because it was not felt to be correct to give respondent for each of the six Index questions and aggregated
each of the six variables described below an equal weight as to obtain a provisional score This was then adjusted to
they appeared to have quite different relationships to the give countr y scores out of 1 to 10 (A score of 1 to 10 had
target question sufficient differentiation to be used as the scale for analysis)
1 Personal responsibilit y for income in retirement
2 Level of awareness of need to plan for retirement
3 F inancial capability Understanding of financial matters
regarding plans for retirement
4 Retirement planning Level of development of plans
5 Financial preparedness for retirement
6 Income replacement Level of projected income replacement
The weighting To estimate the statistical significance of the decline in overall
scores in this yearrsquos Index is theoretically incalculable
Two things have changed from 2012 to 2013
1 C anada and China have joined the sample
2 The new countries have thus influenced the weights of
emphasis placed on the 6 variables used to calculate
the score hence the weights attached to the complex
calculation have changed
However it is noticeable that for countries which were sampled
in both time periods the mean scores for the six individual
variables have almost invariably declined and on average more
than half of them have shown a significant level of decline
In particular the question lsquoDo you think you will achieve this
incomersquo has for all countries shown a significant level of
decline We thus hypothesize that the comparative results
show a significant decline
The Young Pragmatic and Penniless Generation | 36
Net
herl
ands
Net
herl
ands
Net
herl
ands
Ger
man
yG
erm
any
Ger
man
yBase 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
Better off 7 4 23 Sw
eden
Swed
en11 5 7 8 3 11 14 50 5
Swed
en
About the same 19 18 27 23 8 19 18 13 29 29 24 21 U
ntie
dU
ntie
dU
nite
d Worse off 66 74 41 58 79 69 71 76 51 47 21 55
Kin
gdom
Kin
gdom
Kin
gdom
Donrsquot know 9 3 9 9 9 4 4 8 9 10 6 19
Fran
ceFr
ance
Fran
ce
Chart 2 Education of 20 ndash 29 year olds by country Q Please choose from the following list the highest level of educational or professional qualification you have
Spai
nSp
ain
Spa
in
Pol
and
Pol
and
Pol
and
Hun
gary
Hun
gary
Hun
gar y
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
dU
nite
d 100 100 100 100 100 100 100 100 100
Stat
es100 100 100
Stat
esSt
ates
Less than high school graduate 2 44 6 14 1 3 2 7 1 3 Ca
nada
Cana
daC
anad
aHigh school graduate 11 33 53 23 22 22 4 41 14 21 1 2
Some college or trade school 46 2 9 9 9 19 37 14 28 20 4 33 Ch
ina
Chin
aC
hina
College degree University degree 31 15 27 30 41 43 21 33 50 46 9 57
Postgraduate degree or 8 3 3 23 25 11 36 1 8 9 80 6 qualification Ja
pan
Japa
n Ja
pan
Other 2 4 1 1 1 2 0 5 0 6 2
None 0 1 1 0 1 0 0
NET Less than undergrad degree 61 82 70 47 34 46 43 66 42 45 11 37
NET Undergrad degree or higher 39 18 30 53 66 54 57 34 58 55 89 63
Chart 3 Aegon Retirement Readiness Index scores for young employees by country
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
NET Low Index (0-5) 80 64 79 81 85 78 81 73 65 61 61 87
NET Medium Index (6-7) 15 30 18 15 14 21 17 23 25 31 31 12
NET High Index (8-10) 4 6 3 3 1 2 2 4 10 8 7 1
Appendix 2 Country comparisons Chart 1 The majority of young employees believe that they will be worse off in retirement compared to their parents Q Do you think that future generations of retirees will be better off or worse off than those currently in retirement
37 | The Young Pragmatic and Penniless Generation
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsI always make sure that 27 34 27 26 17 14 19 22 35 33 32 20 I am saving for retirement
I only save for retirement G
erm
any
Ger
man
y21 27 20 13 17 21 16 6 17 24 20 24 occasionally from time to time
I am not saving for retirement now 6 11 8 11 5 15 9 4 10 8 9 5 although I have in the past Sw
eden
Swed
en
I am not saving for retirement 35 23 34 46 53 40 49 54 36 33 38 46 though I do intend to U
nite
dU
ntie
dK
ingd
omK
ingd
om I have never saved for retirement and 11 6 10 5 8 10 6 13 3 2 1 6 donrsquot intend to
Fran
ceFr
ance
Chart 5 Younger people are more likely not to be using any means of retirement savings Sp
ain
Spai
nQ Which financial means if any are you currently using to prepare for your retirement
Pol
and
Pol
and
only asked in Germany only asked in Spain
Hun
gary
Hun
gary
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
dSt
ates
Stat
es100 100 100 100 100 100 100 100 100 100 100 100
Defined benefit plan 16 10 25 29 15 3 76 11 20 13 5 Ca
nada
Cana
daDefined contribution plan 28 10 17 19 19 14 10 23 40 7 3
Private pension 8 18 14 10 5 9 4 13 12 40 66 4 Ch
ina
Chin
a Government pension social security 12 43 14 21 8 7 4 18 27 33 71 35
Stocks 5 12 14 7 4 17 7 2 13 10 23 9
Bonds 1 8 5 6 2 16 4 2 8 13 14 3 Ja
pan
Japa
n
Mutual funds 2 14 23 4 2 10 3 4 7 16 9 6
Investment insurances (annuities) 2 3 2 3 2 9 4 5 2 4 6 1
Savings accounts 23 37 38 25 23 6 29 15 36 37 65 36
Investment property 2 10 6 7 9 2 5 2 5 11 18 1
Employee stock purchase 1 1 1 4 1 29 0 4 1 7 1
My home 10 5 8 7 7 8 4 6 6 14 30 1
Reverse mortgage 1 4 2 4
My business 2 1 3 2 2 4 1 1 2 4 12 1
Inheritance 3 11 7 11 7 9 9 8 7 9 6 2
Annuities 1 15 2 2 1 4 3 2 1 2 8
Long-term care insurance 2 1 3 2 9 5 1 6 4 7 1
Life insurance 6 11 8 8 14 3 18 15 19 18 36 17
Unterstuumltzungskasse aus 2 Eigenmitteln finanziert
Unterstuumltzungskasse vom 2 Arbeitgeber finanziert
Chart 4 Younger employees are much more likely to aspire to save for retirement Which of the following best explains your approach to saving for retirement This can include money you contribute to any long-term
investment including pensions stocks and shares investment-linked insurances property etc
Q
The Young Pragmatic and Penniless Generation | 38
Plan de empleo mixto 2 (combinacioacuten de las dos anteriores)
Other 1 6 4 0 1 2 2 3 2 2 3 3
None nothing 8 14 12 23 25 31 6 27 21 17 3 24
Donrsquot know 29 6 17 13 19 8 4 9 7 7 0 9
hart 6 The younger generation has more negative associations of retirement Which if any of the following words do you most associate with retirement
Net
herl
ands
Net
herl
ands
Ger
man
yG
erm
any
Swed
enSw
eden
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
d100 100 100 100 100 100 100 100 100 100 100 100
Kin
gdom
Kin
gdom
Freedom 35 32 36 39 19 26 11 20 35 40 37 33
Opportunity 7 27 25 18 4 8 9 10 17 16 9 16 Fr
ance
Fran
ceLeisure 58 48 36 41 23 24 43 32 50 50 55 6
Excitement 2 5 3 8 2 6 1 2 17 17 4 3 Sp
ain
Spai
nPoverty 11 26 23 11 26 14 37 44 7 5 6 20
Insecurity 34 24 18 16 20 18 35 56 10 9 18 44 P
olan
dP
olan
dLoneliness 4 10 17 16 12 7 11 8 5 9 20 12
Ill health 2 19 7 14 15 9 49 23 6 6 29 11 H
unga
ryH
unga
ryDependent on others 11 11 5 18 14 8 18 19 14 6 11 4
Tired 3 4 8 10 14 10 17 6 7 7 13 19 U
nite
dU
nite
dFar away 38 19 25 21 61 32 2 13 33
Stat
es33 14 22
Stat
es
Boredom 14 16 6 12 16 12 15 8 12 12 16 17 Ca
nada
Cana
daEnjoyment 21 16 17 23 14 29 5 3 37 37 35 15
None of the above 0 1 1 2 0 2 1 1 2 2 1 2
Donrsquot know 2 2 3 3 2 2 1 2 0 Ch
ina
6 Ch
ina
hart 7 Many young employees think they are not on course to achieve target retirement income Ja
pan
Japa
n Do you think you will achieve this income [your estimated income needed in retirement]
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
I donrsquot know if I am on course to 56 37 57 59 50 39 49 48 48 41 22 68 achieve my retirement income
No I am on course to achieve around one-quarter (25) of my 10 14 9 13 15 14 14 13 10 10 10 7 retirement income
No I am on course to achieve around 12 20 14 11 19 19 18 15 12 11 23 12 half of my retirement income
No I am on course to achieve around three-quarters (75) of my 8 14 7 4 8 15 9 8 6 11 20 5 retirement income
Yes I am on course to achieve my 15 15 13 14 8 13 11 17 25 27 25 8 retirement income
CQ
CQ
39 | The Young Pragmatic and Penniless Generation
Chart 8 Young people in most countries expect to retire before 65 Q At what age do you expect to retire from all paid employment
Net
herl
ands
Ger
man
y
Swed
en
Uni
ted
Kin
gdom
Fran
ce
Spai
n
Pol
and
Hun
gary
Uni
ted
Stat
es
Cana
da
Chin
a
Japa
n
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
40 or under 0 1 1 0 0 1 3 1 5 12
41-50 1 2 3 5 2 2 6 3 9 4 37 9
51-59 4 4 4 6 2 4 11 5 7 10 30 1
60 5 11 8 12 10 13 19 12 12 16 21 27
61-64 2 11 10 2 20 7 4 13 5 3 1 2
65 17 22 44 31 34 32 16 26 26 32 3 25
66-69 42 32 15 9 12 29 20 13 9 9 0 1
70 19 11 10 18 10 5 10 9 13 12 0 6
71+ 5 5 5 9 4 5 5 3 7 5 1 4
Never 2 1 1 2 2 2 6 4 1 0 0
Donrsquot know 2 3 2 5 3 2 8 9 5 5 1 13
Mean 67 65 65 65 64 65 63 64 63 64 53 59
Median 67 65 65 65 65 65 65 65 65 65 55 60
Chart 9 Younger employees feel they donrsquot have money to invest for retirement Q What is the single biggest obstacle to you saving for retirement right now
Net
herl
ands
Ger
man
y
Swed
en
Uni
ted
Kin
gdom
Fran
ce
Spai
n
Pol
and
Hun
gary
Uni
ted
Stat
es
Cana
da
Chin
a
Japa
n
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
The uncertain economic environment 19 8 13 9 13 19 11 14 12 9 29 27
Lack of money to invest 28 41 33 43 47 34 48 55 47 50 6 19
Fear of poor investment returns over the coming years 2 5 10 7 5 6 8 2 6 8 14 6
Complexity of investment products 4 4 4 3 5 3 5 2 12 5
I donrsquot know how to go about investing for the long-term 2 3 10 8 5 5 3 3 6 8 7 9
The fees charged by financial services companies 2 4 4 2 4 3 4 2 3 5 2 5
I canrsquot afford to take financial advice 3 3 6 8 2 4 3 5 3 2 3 2
I donrsquot trust the financial services industry 12 11 8 6 5 10 6 2 2 3 5 4
I donrsquot see the need to save for the long-term 6 1 2 2 3 3 3 1 2 1 4 3
Concerns about unstable currencies currency fluctuations 2 5 1 3 3 3 4 3 4 5 15 2
Other (PLEASE STATE) 3 3 1 1 3 2 4 6 2 2 1
Donrsquot know 17 12 11 7 8 6 3 6 8 6 3 17
The Young Pragmatic and Penniless Generation | 40
Chart 10 More money would incentivize young employees to save for retirement Q Which if any of the following would encourage you to save for retirement
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsMore generous tax breaks on long-term savings and pensions 20 44 30 32 27 23 42 42 33 43 40 32 products
Ger
man
yG
erm
any
Access to financial education so that I am more aware of what 24 6 14 21 16 22 21 12 23 24 43 25 I need to do for myself
Swed
enSw
eden
Access to professional financial advice so that I have personalized
Uni
ted
20 24 23 23 15 21 25 9 22 23 44 13 U
nite
drecommendations on what steps
Kin
gdom
Kin
gdom
I need to take
Simpler investment products that 12 33 19 28 20 Fr
ance
18 27 16 32 28 36 10 Fr
ance
I can understand with less jargon
Better and more frequent information about my retirement 16 28 20 27 27 23
Spai
n20 18 25 31 45 22
Spai
nsavings
Better legal protection in case I am 12 18 13 18 10 24 18 13 13 19 21 6 P
olan
dP
olan
dsold the wrong product
A pay rise 46 54 44 64 55 50 70 72 67 64 53 37
A better retirement plan pension H
unga
ryH
unga
ry27 32 25 33 29 26 42 35 39 44 33 32 match from my employer
Other 4 2 1 1 2 2 3 3 2 U
nite
d3 0
Uni
ted
Stat
esSt
ates
Donrsquot know 17 9 16 10 10 12 3 8 8 5 3 17
Not applicable - I already have 3 3 4 2 2 1 1 1 2 2 3 sufficient savings Ca
nada
Cana
da
Chin
aCh
ina
Chart 11 A majority of younger employees do not have a written plan for retirement Q Which of the following best describes your retirement planning strategy
Japa
n Ja
pan
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
I have a written plan 7 18 10 9 6 8 6 5 13 10 8 4
I have a plan but it is not written 24 47 37 25 23 31 29 31 37 44 55 24
down
I do not have a plan 61 32 51 61 62 55 62 58 45 42 34 61
Donrsquot know 7 3 3 5 8 6 3 6 4 4 3 12
41 | The Young Pragmatic and Penniless Generation
Chart 12 For young employees friends and family are the leading source of retirement savings information Q And which of these sources (of information) is most important to you
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
Bank adviser 6 11 19 5 25 5 7 4 3 17 10 2 N
ethe
rlan
dsN
ethe
rlan
dsProfessional financial adviser 12 22 10 12 10 19 19 22 21 25 19 10
Insurance agent spokesperson 3 10 2 3 1 3 6 2 3 0 3 2 G
erm
any
Ger
man
yInsurance company website 3 1 3 2 4 4 2 2 1 3 1
Personal finance websites online 8 5 7 8 5 4 10 8 12 6 10 8 retirement planning tools Sw
eden
Swed
enPersonal finance media 2 2 2 2 2 6 3 1 2 1 6 2
Government website 7 1 3 6 U
nite
d5 2 3 3 2 3 7 1
Uni
ted
Kin
gdom
Kin
gdom
Bank website 2 3 3 2 1 0 3 2 1 6 3 3
My employer 12 8 4 9 4 7 5 12 8 5 4 1 Fr
ance
Fran
ceAccountant 2 6 4 4 1 3 1 3 5 5 1 3
Lawyer 2 3 1 2 2 8 4 2 1 2 2 0 Sp
ain
Spai
nFriends and family 21 22 30 28 24 26 18 24 26 20 25 24
None of these P
olan
dP
olan
dNot applicable 21 7 16 18 19 13 17 15 14 9 5 41
Hun
gary
Hun
gary
Chart 13 Most young workers feel their employer should provide some kind of pension Q In the future what if anything should employers do to help people plan for retirement
Uni
ted
Uni
ted
Stat
esSt
ates
Cana
daCa
nada
Chin
aCh
ina
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 Ja
pan
Japa
n Employers should be required to 24 43 20 40 21 26 20 28 37 34 20 30 contribute to workersrsquo pensions
Employers should be required to make a pension available but not to 12 13 7 17 20 15 15 4 11 14 22 5 contribute into it
Employers should not be required to provide pensions but should 15 9 12 8 9 8 11 6 11 9 9 11 provide information on how to plan for retirement
Employers should provide a range of flexible benefits and 13 18 18 16 15 27 25 28 21 22 45 12 allow individuals to choose which benefits they actually want
Nothing ndash it should be left to individual employees to take care 2 2 5 1 4 3 3 5 6 5 1 9 of themselves
Nothing ndash it should be left to the government to take care of its 2 5 5 2 5 8 15 14 1 4 0 4 citizens
Donrsquot know 30 10 32 17 27 12 12 15 13 13 3 29
The Young Pragmatic and Penniless Generation | 42
Chart 14 Workplace pensions are relatively low down in young workersrsquo priorities when choosing a job Q How important to you would the following workplace benefits be if you were choosing your next job
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsBasic salary 86 93 88 91 88 92 90 94 90 93 96 94
Holiday entitlement 87 94 89 91 92 94 91 94 93 94 96 91 G
erm
any
Ger
man
yOvertime and bonus pay 86 93 87 88 89 90 89 94 90 91 97 90
Location of workplace 88 91 86 92 89 90 89 92 93 93 92 86 Sw
eden
Swed
enMedical health insurance 73 92 84 65 86 87 88 87 93 94 98 83
Opportunities for career progression 86 91 81 90 90 94 91 94 92 91 96 81 U
nite
dU
nite
dAccess to a workplace retirement 85 85 81 82
Kin
gdom
78 84 80 78 84 86 93 74 K
ingd
omplan with employer contributions
Access to good training provision 85 87 85 88 86 91 85 93 86 90 95 74 Fr
ance
Fran
ceFlexible working hours 79 87 58 86 81 89 81 87 91 91 92 57
Life insurance 72 75 79 69 80 82 Sp
ain
84 80 81 88 93 74 Sp
ain
(death in service benefits)
Phased retirement or other employer programs providing for 74 54 75 71 72 81 76 74 76 81 91 65
Pol
and
Pol
and
a transition into retirement
Ability to work past the normal 68 57 64 65 64 74 72 65 74 76 80 70 retirement age H
unga
ryH
unga
ry
Access to a workplace retirement 62 74 61 68 59 77 61 47 68 74 89 65 plan without employer contributions U
nite
dU
nite
dSt
ates
Stat
esEmployee share plans 50 72 54 65 59 73 61 51 64 73 91 55
Access to creche help with the 67 75 64 56 69 79 75 83 58 69 89 68 cost of childcare Ca
nada
Cana
da
Opportunities for foreign travel 53 54 60 55 50 71 58 66 57 61 79 37
Company car 51 46 45 47 49 63 51 49 36 49 69 Ch
ina
39 Ch
ina
Japa
n Ja
pan
Chart 15 Young workers think the state pension will need to be reformed Q With the cost of government pensions becoming a greater concern as people live longer which if any of the following do you think
the government should undertake
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
The government should reduce the overall cost of state pension 15 33 16 15 16 20 28 22 21 26 30 16 provision by reducing the value of individual pension plans
The government should increase overall funding available for the 12 21 30 22 14 34 19 26 21 18 29 10 state pension through raising taxes
43 | The Young Pragmatic and Penniless Generation
he government should take a alanced approach with some 27 26 12 30 28 23 24 16 34 31 38 41 eductions in individual payments nd some increases in tax
he government should not do nything State pension provision 7 2 12 5 3 4 3 3 5 4 0 5 ill remain perfectly affordable in he future
onrsquot know 38 19 29 29 39 20 26 34 19 21 4 28
Net
herl
ands
art 16 Products which protect against investment risk are the most important to young workers ( interested) Thinking about the types of financial products you could purchase to help provide you with security in retirement on a scale of 1 to 5
how interested are you in the following options G
erm
any
Swed
en
Uni
ted
Kin
gdom
ase 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 Fr
ance
100 100 100 100 100 100 100 100 100 100 100 100
product providing a guaranteed etirement income stream or 75 81 73 76 74 83 78 76 87 85 94 69
Spai
nifetime income in retirement
product which protects my 74 79 73 76 72 82 77 74 84 86 94 65 etirement income against inflation P
olan
d
product which guarantees that I 72 82 73 78 75 81 76 73 86 86 90 67 onrsquot lose my initial investment H
unga
ry product which helps meet the ost of long-term care if I become 74 79 74 77 70 79 76 71 86 85 84 66
Uni
ted
nable to look after myself St
ates
product which protects my capital 71 81 71 76 68 76 77 73 84 83 93 65 rom poor investment returns Ca
nada
product which generates a etirement income and allows 69 78 71 75 68 81 77 72 84 86 94 70 e to take a lump sum from the
Chin
anvestment should I need to
product where the annual 66 78 68 75 72 79 77 70 85 86 87 64 anagement charges are kept low Ja
pan
product which enables me to eep some control over how my 71 73 70 75 72 80 75 69 88 85 91 63 avings are invested during my etirement
product which manages the sset allocation so that I am never 68 70 67 73 66 76 71 67 80 83 95 60 xposed to a level of risk Irsquom not omfortable with
product which continues to rovide a retirement income to my 74 78 71 75 73 81 79 73 86 82 94 60 pouse in the event that I die first
product which protects my family gainst having to pay estate taxes 73 76 71 74 75 81 75 69 82 82 89 56 hen I die
product which locks in investment 72 71 63 73 64 71 59 56 81 84 89 61 eturns during the good years
Tbra
Tawt
D
ChQ
B
Arl
Ar
Ad
Acu
Af
Armi
Am
Aksr
Aaec
Aps
Aaw
Ar
The Young Pragmatic and Penniless Generation | 44
Contents
Foreword 1
Summary 2
Introduction 5
The survey 7 Part 1 Young people at risk in an uncertain world 7 Part 2 The savings outlook of young employees 12 Part 3 What is holding young employees back 18 Part 4 Creating the right conditions for young employees to save 21
Recommendations Enabling young workers to save 27
Glossary 30
About Aegon Transamerica Center for Retirement Studiesreg and Cicero Consulting
Acknowledgements
References and notes
Appendix 1
32
33
34
36
37 Appendix 2
The Aegon Retirement Readiness Survey 2013
Foreword The Changing Face of Retirement The Young Pragmatic and
Penniless Generation sets forth some of the key challenges facing
young adults as they seek to balance their immediate financial
pressures with the goal of planning for retirement The sur vey
was based on 10800 employees in 12 countries worldwide and
included 2722 employees between the ages of 20 and 29
With over half of young people today expecting to be worse off
in retirement compared to their parentsrsquo generation the current
generation of people in their twenties find themselves faced with
particular challenges in saving for later life
We are all living through a period of rapid and unprecedented
economic and social change Nowhere is this change felt more
than among young adults who are whether they realize it or not
forging a brave new world one which is highly educated high
tech and well traveled Yet in this world of new opportunities
many young people are financially stretched The ongoing global
economic downturn has created a highly uncertain financial
outlook with historically high levels of youth unemployment
and personal debt (particularly student debt) and competing
pressures on young adults to establish themselves in the world
of work while starting a family and planning for the long-term
At the same time governments and employers are busy
introducing pension reforms which place greater financial
responsibilities on younger people to fund their own retirement
Faced with this challenge our research finds that the aspiration
to save for retirement remains surprisingly strong for employees
in their twenties One quarter are saving already and almost half
would like to begin As the squeeze on household incomes places
constraints on their ability to save it is necessary to improve
access to retirement products preferably with clear tax benefits
and to better financial education and advice Likewise the
retirement system itself must address the increasing pragmatism
of young people who favor a more flexible transition into
retirement which strikes a balance between work and leisure
The role for governments employers and the retirement savings
industry is to put in place the right conditions to ensure that such
constraints are overcome and retirement aspirations are realized
It is our hope that the insights gained from the Aegon Retirement
Readiness Sur vey 2013 will contribute toward retirement
solutions which better fit the ever-changing lives of young adults
Marc van Weede Executive Vice President Head of Sustainability Aegon NV
Catherine Collinson President Transamerica Center for Retirement Studies
Mark Twigg Executive Director Cicero Group
1 | The Young Pragmatic and Penniless Generation
Summary Todayrsquos world is changing rapidly The pace of change is felt by none more than the twentysomething generation whose world has been transformed by developments such as the Internet the rise of social media the onset of affordable air travel and the rapid expansion of higher education Furthermore economic growth in developing markets has transformed the opportunities and outlook of millions of young people in what were once low-income countries particularly in China one of our survey countries
The Young Pragmatic and Penniless Generation | 2
Opportunities and obstacles Young employees are realists in a changing world This changing world presents young people with many Working adults between the ages of 20 and 29 expect to
opportunities but also with uncertainties and obstacles which be worse off financially in retirement than their parents (59)
impact their financial planning and long-term financial security and take on more financial responsibility including funding their
Cast-iron government and employer retirement benefits are own retirement Additionally 37 believe that they will likely
less prevalent than before and have given way to a more fall short of their retirement needs Furthermore 27 believe
individualistic approach based on personal responsibility that their retirement shortfall will be large at least half of what
In an uncertain labor market employment is less secure Todayrsquos they estimate they will need in retirement As a result 44 are
employees switch employers take career breaks and undertake pessimistic that they will not be able to choose when to retire
periods of self-employment or contract work A steady salary a luxury enjoyed by many of their parents Another factor is the
progression has become the exception rather than the rule financial impact of caring for the older generation with 28
Major life goals such as education funding and home ownership expecting to provide financial support for retired parents
are more costly and harder to achieve than in previous and 40 agreeing that lsquoadult children of retirees should
generations and also compete with retirement funds In this help provide financial support for their parents if neededrsquo
new reality there is a clear role for employers and retirement
providers supported by government to embrace young Forecasts support such pragmatism Today the average
employeesrsquo willingness to take control of their financial future retirement age is around 63 years but by 2050 when those
in their twenties today will be entering retirement the official
Key findings retirement age of many countries will be an average of
The Changing Face of Retirement The Young Pragmatic 67 to 68 years due in part to increased longevity an aging
and Penniless Generation reveals a retirement shortfall for workforce and receding government benefits In addition
employed young adults between the ages of 20 and 29 that youth unemployment is at historically high levels In Spain this
is due to a lack of opportunity to save rather than a lack of stands at 53 for 15 to 24 year olds the highest of our survey
will A range of uncertainties and obstacles some driven by life countries followed by Hungary (28) and Poland (27)
stage many generationally unique conspire to make saving for
retirement harder today than it was for older generations Young employees are ready to do what it takes to save for Young employees recognize these challenges and are prepared their retirement to take responsibility for the solution To do this they require A surprising and encouraging two-thirds of young employees are
employers retirement providers and governments to provide committed to or have the ambition to save for their retirement
suitable financial expertise knowledge and products A core 25 of young employees are habitual savers who lsquoalways
make surersquo that they are saving for retirement and a highly
encouraging 41 of young employees are lsquoaspiringrsquo savers
who intend to save Furthermore the need to save is widely
recognized ndash 57 of young employees believe that retirement
savings are important but not a priority for them at the moment
Taken together these findings suggest that many young
employees are prepared to lsquoownrsquo the retirement problem
having accepted the new reality perhaps more readily than
some older employees
3 | The Young Pragmatic and Penniless Generation
Aspiring savers unable to meet their savings goals can be Young employees can meet their retirement goals and turned into habitual savers with better educational support aspirations with access to flexible financial products which advice and information suit the life they lead The survey reveals that a significant percentage of younger Todayrsquos young employees require flexible savings products
employees (47) do not know if they are on course to achieve such as more portable retirement benefits and other workplace
their desired retirement income ndash a lack of insight into the savings offerings which move with them between employers
future which may contribute to savings inertia Addressing and across different life stages Young employeesrsquo employment
this shortfall many young employees express an interest in patterns are different to those of previous generations
financial education and advice Fully 26 say that lsquobetter and The survey revealed that 39 are planning to look for a new
more frequent information about my retirement savingsrsquo would job in the next 12 months compared to 29 of all employees
encourage them to save more for retirement 23 cite lsquoaccess and 31 of young employees are thinking about quitting their
to a professional advisor with personal recommendationsrsquo and jobs At the same time young employees place a high value
22 want lsquofinancial education so I am more aware of what I on occupational benefits with 87 believing a workplace
need to do for myselfrsquo retirement plan with employer contributions would be an
important factor when choosing their next job
Tellingly almost a quarter of young employees (24) cite
friends and family as the most important source of information These dual needs of workplace retirement plans and high levels
in choosing how to save for retirement which suggests that of labor mobility can be resolved with a more flexible range of
employers and professional financial services companies are employer benefits A third (33) of young employees would
either not providing appropriate support or are not providing be encouraged to save for retirement by matched retirement
support in a manner that is perceived to add value to these contributions from their employer Again clarity and insight are
employees Given the severe long-term repercussions themes with 24 stating that access to simpler investment
of poor retirement readiness it is essential that employers products would increase their propensity to save Finally there
and retirement companies make haste in filling this gap is a leading role for government to play through the creation of
stable long-term financial and taxation policy Among young
employees 34 stated that more generous tax breaks on
long-term savings and retirement plans would encourage
them to save
The Young Pragmatic and Penniless Generation | 4
Introduction Todayrsquos twentysomethings are young but hardly carefree At a time in life when previous generations built a career and laid the foundations for a secure future many of todayrsquos young workers face unprecedented financial challenges Student debt uncertain employment prospects high housing costs the potential support of elderly parents and receding government retirement benefits are just a few of the economic and financial uncertainties that undermine their ability to plan and save for their retirement At a time in life when savings have the longest time horizon for growth these challenges work against young workersrsquo future retirement readiness
5 | The Young Pragmatic and Penniless Generation
The structure and methodology of this report specialized public policy interventions Thus the research reflects
The Young Pragmatic and Penniless Generation polled employees views of the mainstream working population
and retirees in 12 countries Canada China France Germany
Hungary Japan the Netherlands Poland Spain Sweden the A guide to this report United Kingdom and the United States These countries were The reportrsquos conclusions and recommendations flow from an
selected on the basis of having distinctive retirement systems examination of todayrsquos young employees in the context of older
as well as varying demographic and aging trends i and retired employees
bull Par t 1 of this report explores the financial pressures that Respondents were interviewed using an online panel survey young people face from unemployment intermittent
in their native language ii in January and February of 2013 employment and extended full-time education
The sample comprised 10800 employees including 2722 people bull Par t 2 reviews the savings outlook including young employeesrsquo between the ages of 20 and 29 and 1200 retirees The 12 attitudes toward saving expectations for retirement income
countries surveyed represent employees who cumulatively have and retirement age and perceived responsibilities toward
access to around 85 of the worldrsquos private retirement assets iii parent care
(excluding government retirement benefits) bull Par t 3 examines some of the potential savings obstacles such as household economics and the income position of
Issues covered included attitudes toward retirement the individual employee and the importance of advice and
preparedness the role of government and employers in the education in altering youth perceptions of financial priorities
provision of retirement benefits and the impact of the financial bull Par t 4 explores how to encourage young people to save and crisis on attitudes to investment risk and retirement planning the role of employers in this
The survey did not include the self-employed unemployed
or long-term incapacitated since each of these groups faces The final part sets out recommendations for improving the
specific retirement planning challenges which may require retirement readiness of this important group within society
The Young Pragmatic and Penniless Generation | 6
Part 1 Young people at risk in an uncertain world As societies enjoy the benefits of longer life expectancy people will need to work harder to secure a comfortable retirement This will mean saving more during working life and a redefinition of how to approach retirement When it comes to achieving this important life goal however some groups are more at risk This report examines one such group in detail young employees at the beginning of their working life
7 | The Young Pragmatic and Penniless Generation
Countr y Median Income
lsquo(nearest 000) Married Undergrad degree or more Dependent children (any)
All 20-29 year olds $27500 25 53 25
Netherlands $37000 17 39 20
Germany $38000 33 18 27
Sweden $39000 16 30 32
United Kingdom $48000 24 53 24
France $28000 23 66 26
Spain $23000 13 54 25
Poland $13000 38 57 28
Hungary $6000 31 34 16
United States $43000 26 58 27
Canada $51000 36 55 27
China $18000 31 89 30
Japan $37000 12 63 11
Who are younger employees are also more likely than average to be single and much less
This report defines younger employees as people between likely to have children A quarter are married compared to an
20 and 29 years of age a group that belongs to the Millennials average of 64 for the generation now in their 50s
generation born between 1980 and 2000 This group differs
widely among countries although there are clear trends Education levels vary across the countries included in this research
Many have been in the labor market just a few years after a long due to differences in higher education systems (Chart 1) Overall
period of higher education Unsurprisingly median household those aged 20-29 were more likely than the average respondent
incomes are lower around $27500 according to this research to have at least an undergraduate degree The increasing
compared to an overall median of $46000 Twentysomethings prevalence of education has both positive and negative impacts
Chart 1 A portrait of younger employees Q Which of the following reflects your annual household income before taxes
Q What is your marital status
Q Please choose from the following list the highest level of educational or professional qualification you have
Q How many children do you have who are financially dependent on you Please include all children and stepchildren
Why are young people at risk Such changes will not be achieved easily in the current climate
Todayrsquos young people face a challenging set of circumstances The global financial crisis of 2007-8 not only created a need
An aging society means fewer employees supporting more for long-term structural retirement reforms it also led to the
retirees which is profoundly affecting how societies fund more immediate menace of historically high levels of youth
retirement In most of the countries surveyed lsquotraditionalrsquo unemployment The International Labour Organization (ILO)
retirement provision such as government retirement benefits estimated that in 2013 unemployment affected 73 million young
and other forms of social security or employer-sponsored people aged 15-24 worldwide representing more than 126
retirement arrangements like defined benefit company of all young people iv Across the EU 228 of people under 25
retirement plans are already subject to long-term reforms were unemployed in 2012 and in Spain the figure was 53 v
These reforms will reduce the value of future entitlements It is worth noting that the study is conducted among those who
by lowering retirement income benefits and raising the age are currently employed (part- or full-time) so the findings do not
of retirement and are likely to begin to take full effect from fully take into account the significant number of unemployed
the middle of this century just as the current generation young people
of twentysomethings enters retirement Consequently the
retirement prosperity enjoyed by todayrsquos Baby Boomers will not
be shared by subsequent retiring generations unless there is a
major change in their savings behavior
The Young Pragmatic and Penniless Generation | 8
13
4
16
3
Chart 2 Youth unemployment in 2005 and 2012 across Aegon survey countries (excluding China)
60 1
24
14
3
2005 2
06
2012
23
8
45
15
2
81
19
4
30 2
81
86
79
15 9
4
95
37
8
0 2
65
y
Japan
Spain
19
7
Canad
a
Fran
ce
Poland
Germ
any
Hunga
r
Sweden
OECD tota
l
Nether
lands
53
2
United S
tate
s
United K
ingdom
22
Note Youth unemployment rate of youth labour force (age 15 - 24) vi
23
7
12
2
21
11
3
16
2
The problems of high levels of youth unemployment and economic uncertainty affect those with jobs as well as those without
as they breed lower levels of job security and downward pressure on wages They also have a significant impact on the psychology and
confidence of younger people including those in work and their confidence in their short-term and retirement finances As the survey
findings reveal most young employees expect to find themselves worse off than their parentsrsquo generation when they enter retirement
(Chart 3)
Chart 3 The majority of young employees believe that they will be worse off in retirement compared to their parents Q Do you think that future generations of retirees will be better off or worse off than those currently in retirement
Base 20-29 year olds
Donrsquot knowBetter off
8 13
Total Respondents
2722
20 About
the same
59
Worse off
9 | The Young Pragmatic and Penniless Generation
Another major influence on the ability of young employees to save for retirement is the growth of higher education One positive
is that college graduates are more likely to benefit from lower unemployment rates fare better during economic downturns and
experience higher incomes across their lifetime supporting aspirations like home ownership vii and helping to sustain long-term
savings and increased levels of retirement preparedness (Chart 4)
Chart 4 Graduates are likely to enjoy a greater sense of retirement preparedness Q Thinking about how much you are putting aside to fund your retirement are you saving enough
Base All lsquovery prepared for retirementrsquo
30 27
17 16Postgraduate degree or qualification
College degree University degree Some college or trade school
8 High school graduate
1 Below high school graduate Other
Conversely full-time education delays entry into the labor Why is this group of young employees important arket causing a loss of several years of full-time earnings By the middle of the century todayrsquos 20-29 year olds will
otential Moreover ballooning levels of student debt may have led the world economy through an economic recovery
ignificantly delay the onset of post-graduation saving and dramatic demographic shifts during a period of greater
etween 2004 and 2012 for example student debt in the uncertainty for modern retirement systems and other issues
nited States tripled to $966 billion nationwide The effect In developing countries such as China this group will be more
f this is that todayrsquos younger employees must take greater affluent than their parents but still need to deal with the
ersonal responsibility for their savings a challenge in the consequences of a rapidly aging population and an economy
urrent economic and financial circumstances which has passed its phase of rapid growth
For all of their challenges however this group of young people
represents the biggest opportunity to change societal savings
behaviors for the better The Aegon Retirement Readiness Survey
2013 provides insights into how best to achieve this through a
greater understanding of the grouprsquos outlooks and savings habits
m
p
s
B
U
o
p
c
The Young Pragmatic and Penniless Generation | 10
45
29
20
6
50
24
21
6
56
19
21
4
46
27
21
6
Better off About the same
Worse off Donrsquot know
All work
ers
20-29 ye
ar old
s
Male 2
0-29 ye
ar old
s
Fem
ale 2
0-29 ye
ar old
s
Chinarsquos young employees bucking the gloomy trend optimistic that their economy will continue to expand over
A key finding of this yearrsquos Aegon Retirement Readiness the next 30 years Concerns about the sustainability of
Survey is that Chinese employees are far more confident growth remain however Just 37 of Chinese 20-29 year
and optimistic about their financial future than employees olds believe that the Chinese economy will improve over
in other countries This is also true of younger employees the next 12 months ndash indeed 2013 will see the economyrsquos
Of those Chinese aged 20-29 half (50) believe that they slowest expansion since 1990 x Long term Chinarsquos rapidly
will be better off in retirement than those currently in aging population makes creating a comprehensive and
retirement Younger Chinese men are the most optimistic sound retirement system an urgent priority xi Coverage has
with 56 believing that they will be better off expanded in the past 10 years with reforms such as the
introduction of the Enterprise Annuity in 2005 yet it is still
This optimism is relatively justified Since 1980 Chinese GDP not clear how China will build a universal retirement system
per capita has increased thirty-fold from $193 to $6091 across both the government-sponsored and private sectors
in 2012 viii While this dramatic increase has not benefitted However the success of reforms carried out to date suggests
all Chinese equally ndash by the Chinese governmentrsquos measure that tax incentives and efforts to improve awareness are
99 million rural Chinese live in poverty ix ndash huge progress required as part of any long term solution
has been made and young people in China are generally
Chart 5 Chinarsquos younger employees are confident of a better retirement Q Do you think that future generations of retirees will be better off or worse off than those currently in retirement
Base Respondents in China
11 | The Young Pragmatic and Penniless Generation
Part 2 The savings outlook of young employees This chapter explores the financial behaviors and savings gaps and needs of 20-29 year olds through their attitudes toward financial issues the wider economy and the savings required for a comfortable retirement
The Young Pragmatic and Penniless Generation | 12
75
21
4
69
27
4
64
31
4 5
7
36
7
20-29
30-39
40-49
50-59
44
40
16
NET Low Index (0-5)
NET Medium Index (6-7)
NET High Index (8-10)
60-69
Retirement readiness and young employees However many young employees have concerns about achieving
Retirement is seen as a major life stage by young employees this Over a third (38) are pessimistic that they will not have
They typically expect to spend an average 20 years of their lives enough to live on in retirement and 44 are pessimistic about
in retirement a definition of retirement that is consistent across being able to choose when they retire Furthermore 28 have
all working age groups Retirement conjures broadly positive made no plans at all for their retirement which may help explain
associations Fully 63 of employees in their twenties aspire some of these concerns Health worries are less of an issue with
to travel during retirement 39 see it as a period of leisure 52 being optimistic that they will enjoy good health in old age
and 30 associate it with freedom The need to plan and save although 20 believe that they will not which is perhaps related
for this phase of life is also widely accepted Half (50) of to the 17 who associate retirement with ill health in general
employees in their twenties are aware of the need to save and
64 feel a high or very high degree of personal responsibility Overall 75 of employees in their twenties achieved a low
to ensure sufficient income for retirement retirement readiness score of 0-5 on the Aegon Retirement
Readiness Index (please refer to the glossary and Appendix 1 for
an explanation of the Index) The percentage of employees with a
low score of 0-5 drops with each increase in age group and is 44
among those in the lsquoat retirementrsquo group of 60 to 69 year olds
Chart 6 Aegon Retirement Readiness Index scores for employees across age groups For more information on the ARRI see page 36
Base All aged 20 - 69
Life stage and savings attitudes Getting married and starting a family are two such events
he Retirement Readiness Index reveals that retirement Of employees in their twenties 25 are married and
reparedness is to some extent age- and life stage-related 25 have children whereas for those in their 30s 54 are
hart 6) For younger employees the idea that retirement is married and 56 have children representing a major shift
r awayrsquo combined with lower earnings and other spending toward parenthood
riorities (such as higher education or purchasing a house)
an be powerful obstacles to saving for retirement Thus while Encouragingly while young employees are less likely to
5 of all employees say that they lsquoalways make surersquo that they have started saving for retirement many see themselves as
re saving for retirement just 25 of 20-29 year olds do so future lsquoaspiringrsquo savers Fully 41 intend to save in the future
t present over half (57) of 20-29 year olds are not saving compared to 27 of all employees and only 7 do not intend
r retirement compared to 46 of all employed adults to save for retirement This large group of aspiring savers
ven in China where 44 are always saving for retirement who are committed to the idea of putting money aside for
st 32 of 20-29 year olds do so retirement challenges the view that young people are unwilling
to save Furthermore since converting these young employees
his life cycle effect can be seen in numerous ways At the from aspiring savers to regular savers may depend on the
utset of adult life employees experience lower income and right economic conditions and appropriate financial incentives
igher spending as they prioritize and fund life events with a helping them is a major opportunity for governments and
ignificant impact on their ability or desire to save for retirement employers
T
p
(C
lsquofa
p
c
3
a
A
fo
E
ju
T
o
h
s
13 | The Young Pragmatic and Penniless Generation
35 25 20 19 12 9 27 41 7 7
I always make sure I only save for I am not saving for I am not saving for I have never saved that I am saving retirement occasionally retirement now although retirement though for retirement and for retirement from time to time I have in the past I do intend to donrsquot intend to
All 20 to 29 year olds
NET Low Index (0-5)
NET Medium Index (6-7)
NET High Index (8-10)
Chart 7 Younger employees are much more likely to aspire to save for retirement but the majority are not saving Q Which of the following best explains your approach to saving for retirement This can include money you contribute to any
long-term investment including pensions stocks and shares investment-linked insurances property etc
Other findings support the assertion that younger savers This can be seen in Chart 8 More 20-29 year olds claim that
are open to increasing their retirement savings Over a third they are not likely to be saving for retirement by any means
(37) of 20-29 year olds feel lsquovery responsiblersquo for ensuring (17 against 12 for all adults) and are generally less likely
a sufficient retirement income Note however that this does to use any of the savings products mentioned Revealingly
not translate into better developed financial plans and savings 20-29 year olds are far less likely to name lsquogovernment benefits
strategies Only 7 in this age group feel they have lsquowell in retirementrsquo as a source of retirement income although almost
developedrsquo personal retirement plans and 33 say they are all respondents have some such entitlement This may be due
lsquohardly saving anythingrsquo for retirement Clearly awareness of the to unawareness of government benefits and or greater
retirement situation does not translate into actual retirement scepticism about governmentsrsquo ability or willingness to
planning activity provide for them in old age
The Young Pragmatic and Penniless Generation | 14
Chart 8 Younger people are more likely not to be using any means of retirement savings Q Which financial means if any are you currently using to prepare for your retirement
33 Savings accounts 31
36 Government pension social security 24
25 Defined benefit plan 21
22 Private pension 17
23 Defined contribution plan 15
20 Life insurance 15
14 Stocks 10
14 My home 9
12 Mutual funds 8
9 Inheritance 7
9 Bonds 7
8 Investment property 7
5 Employee stock purchase 5
5 Investment insurances (annuities) 4
4 Long-term care insurance 4
6 Annuities 3
My business 2 3
Reverse mortgage 1 1
Other 3 2
12 None nothing 17
6 Donrsquot know 10
All 20 to 29 year olds
Leisure
Freedom
Far away
Insecurity
Enjoyment
Poverty
Ill health
Boredom
Opportunity
Dependent on others
Loneliness
Tired
Excitement
None of the above
Donrsquot know
Retirement associations What does the younger generation feel about retirement and want to get out of it Perhaps unsurprisingly 20-29 year olds are more
likely to be negative than older respondents associating retirement with boredom loneliness and ill health They are also far more
likely to believe retirement is lsquofar awayrsquo which is likely to be a barrier to retirement saving
15 | The Young Pragmatic and Penniless Generation
Chart 9 The younger generation has more negative associations with retirement Q Which if any of the following words do you most associate with retirement
44 Leisure 39
36 Freedom 30
17 Far away 26
25 Insecurity 25
25 Enjoyment 21
19 Poverty 19
15 Ill health 17
9 Boredom
13
16 Opportunity
13
10 Dependent on others
12
9 Loneliness
11
0
r olds
7Tired
1
6Excitement
6
2None of the above
1
2Donrsquot know 2
All 20 to 29 yea
Aspirations and responsibilities for retirement Income levels in retirement ung people have similar retirement aspirations to the general A high proportion (47) do not know if they are on course
pulation for example travel (63) spending time with to achieve their retirement income goal Combined with the
iends and family (61) and pursuing new hobbies (52) high level of financial responsibility young employees expect
r them however retirement also includes the responsibility of to assume in retirement it is clear that people not only need
ring for others Two-fifths (40) believe that lsquoadult children to build much greater awareness of what kind of financial
retirees should help through providing financial support to pressures they are likely to face in retirement but also require
eir parents if neededrsquo and 28 believe that this will affect greater support in establishing realistic retirement income
em directly in retirement through providing financial support targets which are capable of meeting their needs
their parents A fifth (21) also expect to spend some of
eir retirement caring for other family members while just
donrsquot expect to provide for anyone compared to 40 of all
ployees Clearly todayrsquos young employees anticipate serious
ancial responsibilities in their retirement
Yo
po
fr
Fo
ca
of
th
th
to
th
30
em
fin
The Young Pragmatic and Penniless Generation | 16
Chart 10 Many young employees do not think that they are on course to achieve target retirement income Q Do you think you will achieve this income [your estimated income needed in retirement]
Base 20-29 year olds
Yes I am on course to achieve my retirement
income
16
47
12
16
10
I donrsquot know if I am on course to achieve my
retirement income
No I am on course to achieve around
one-quarter (25) of
No I am on course to achieve around half of my
retirement income
No I am on course to achieve around
three-quarters (75) of my retirement income
532
China
586
Japan
United S
tate
s
628
Poland
635
Canad
a
636
Hunga
r
638
y
Fran
ce
645 647
Spain
Sweden
649
United K
ingdom
651
Germ
any
653
Nether
lands
666
my retirement income
When will young people retire Media reports about the need to raise the age of retirement appear to have influenced younger employees Fully 44 of 20-29 year
olds do not expect to be able to choose their retirement date although the younger generation do expect to retire at a similar age
to older employees 63 This varies considerable by country In the Netherlands young employees expect to retire eight years later
than those in Japan Some countries such as China and Japan have surprisingly low expected retirement ages suggesting that young
employees may benefit from having a better understanding of when government or workplace retirement benefits kick in
Chart 11 Young people in most countries expect to retire before 65 Q At what age do you expect to retire from all paid employment
Base 20-29 year olds
Despite expecting to retire at the same age as their parents younger employees are more open to a transition into retirement
reflecting their more flexible outlook toward work Around half (51) are happy to change the way they work in some way as they move
into retirement Just 8 expect to keep working as they do currently
17 | The Young Pragmatic and Penniless Generation
Part 3 What is holding young employees back Insights into what young employees feel is holding them back from saving or saving more can be used to encourage younger people to adopt more positive savings behaviors This chapter explores the attitudes of young employees toward the financial obstacles they face and asks what actions they have taken in preparation for retirement The findings reveal that while the majority lacks adequate planning for their retirement needs financial shortcomings are only part of the stor y Spending preferences play a key role in the savings gap of advanced economies
The Young Pragmatic and Penniless Generation | 18
Lack of money to invest 37
16 The uncertain economic environment
7 Fear of poor investment returns over the coming years
6 I donrsquot trust the financial services industry
6 I donrsquot know how to go about investing for the long-term
4 oncerns about unstable currencies currency fluctuations
4 Complexity of investment products
4 I canrsquot afford to take financial advice
3 The fees charged by financial services companies
3 I donrsquot see the need to save for the long-term
Other 2
Donrsquot know 8
A pay rise
More generous tax breaks on long-term savings and pensions products
A better retirement plan pension match from my employer
Better and more frequent information about my retirement savings
Simpler investment products that I can understand with less jargon
Access to professional financial advice so that I have personalized recommendations on what steps I need to take
Access to financial education so that I am more aware of what I need to do for myself
Better legal protection in case I am sold the wrong product
Other
Not applicable - I already have sufficient savings
Donrsquot know
Obstacles and incentives to saving
Chart 12 Younger employees feel they donrsquot have money to invest for retirement Q What is the single biggest obstacle to you saving for retirement right now
Base 20-29 year olds
C
What is the single biggest obstacle preventing twentysomethings that they rank pressing and desirable life goals such as marriage
m saving for retirement Not having enough money to invest starting a family vacations and other leisure activities above the
top of the list cited by over a third (37) although this figure need to plan for retirement This suggests the savings gap is
ops to just 6 in the emerging market of China where mean preference-driven
omes are the lowest by far ($18000) suggesting that lack of
sh may be partly a state of mind Young employees in China The biggest obstacle to retirement savings cited by one-eighth
actually more worried about local concerns such as economic (13) of respondents is either not knowing how to invest for the
certainty (29) and currency instability (15) Behavioral long-term or the complexity of investment products charges and
ance has an impact too with the way young employees frame fees Ready solutions to this include improving young employeesrsquo
eir financial priorities creating its own obstacles to saving financial literacy about retirement planning and creating easier
many as 57 of 20-29 year olds believe that saving for access to professional financial advice
tirement is important but not a current priority suggesting
fro
is
dr
inc
ca
are
un
fin
th
As
re
19 | The Young Pragmatic and Penniless Generation
Chart 13 More money would incentivize young employees to save for retirement Q Which if any of the following would encourage you to save for retirement
Base 20-29 year olds
57 A pay rise
More generous tax breaks on long-term savings and pensions products
34
A better retirement plan pension match from my employer
33
Better and more frequent information about my retirement savings 26
Simpler investment products that I can understand with less jargon 24
Access to professional financial advice so that I have personalized recommendations on what steps I need to take 23
Access to financial education so that I am more aware of what I need to do for myself 22
Better legal protection in case I am sold the wrong product 16
Other 2
Not applicable - I already have sufficient savings 2
Donrsquot know 10
Chart 14 Very few younger employees have a written plan for retirement Q Which of the following best describes your retirement planning strategy
Base 20-29 year olds
5 Donrsquot know I have a
written plan
8
34 I have a plan but it is not
52 written down
I do not have a plan
Turning to incentives greater remuneration predictably tops a list Retirement planning of what would encourage 20-29 year olds to save for retirement Retirement planning is essential to adequate retirement saving
More tellingly a third (33) would like their employer to provide although it is somewhat lacking in todayrsquos younger employees
a better retirement plan into which both parties contribute Over half (52) have no retirement planning strategy at all
Better information and simple products would also help more and only 8 have noted down their retirement strategy
people to save A quarter (26) would be encouraged to save by
better and more frequent information about retirement savings Nevertheless the respondents polled believe that the current
while a similar number (24) want simple investment products global economy makes retirement planning increasingly
that are easy to understand As with the previous question a important ndash 71 agreed with this statement It is clear from this
lack of investment knowledge and the complexity of investment that young people between the ages of 20 and 29 do not lack
products are revealed as obstacles to savings the will to save they lack the opportunity
The Young Pragmatic and Penniless Generation | 20
Part 4 Creating the right conditions for young employees to save How may young employeesrsquo obstacles to saving be overcome For retirement readiness this will be a defining question of the early twenty-first centur y ndash and an extremely challenging one given the number of serious issues affecting younger employeesrsquo finances What was learned in the previous chapter about encouraging young employees to save is a start This chapter examines which areas and triggers to saving can be unlocked and whether government employer or individual should take most responsibility
21 | The Young Pragmatic and Penniless Generation
Friends and family
Professional financial adviser
17
24
Bank adviser 9
Personal finance websites online retirement planning tools
My employer
Government website
4
8
7
Insurance agent spokesperson
Accountant
3
3
Personal finance media 3
Lawyer
Bank website
3
2
Insurance company website
Donrsquot know
2
15
Information and advice on retirement saving strong theme revealed by our findings is that younger This finding is remarkably consistent across the countries
mployees want more information on savings products and sur veyed despite significant differences in market makeup
etter access to advice The largest share 24 (compared although some differences exist For instance a quar ter
o 17 for all employees) finds friends and family to be the (25) of young employees in France turn to bank advisers
ost important source of advice followed by professional for financial information nearly triple the number among all
dvisers (17) and bank advisers (9) That young employees young people (9)
urn to friends and family first suggests an unmet need for
rofessional financial advice This is both a challenge and an
pportunity for the financial ser vices sector
hart 15 For young employees friends and family are the leading source of retirement savings information Which of these sources (of information) is most important to you
ase 20-29 year olds
A
e
b
t
m
a
t
p
o
CQ
B
What is the role of the workplace in retirement planning Does this influence what retirement benefits younger
In response to shifting employment patterns todayrsquos younger employees expect from their workplace Certainly a majority
employees are less loyal to their employers than older workers favor workplace retirement plans with 61 believing that these
Fully 39 of 20-29 year olds are planning to look for a new job should be a fundamental part of pay (although this is lower
in the next 12 months compared to 29 of all workers and than for employees overall) and just 4 feel that retirement
31 frequently think about quitting their jobs Strikingly while planning should be left entirely to individuals
53 of all workers plan to stay with their current employer
until retirement just 37 of 20-29 year olds say this However there is evidence of a slight shift in perceptions
Younger workers are less likely to want workplace retirement
Doubtless much of this is because younger workers are more plans over other factors Of those who want employer
mobile and have more opportunities Another trigger to lower retirement plan contributions only 46 wanted this even if
employer loyalty may be the expectation of holding more jobs it reduced benefits and 35 (compared to 43 of all workers)
and even pursuing multiple careers over a working lifetime if it cut jobs
The Young Pragmatic and Penniless Generation | 22
Donrsquot know Employers should be
required to contribute to workersrsquo pensions
5 Nothing ndash it should be left to the government to take 18
care of its citizens 28
4 Nothing ndash it should be left to individual employees to
take care of themselves
13
22
Employers should provide a range of flexible benefits
and allow individuals to choose which benefits they
actually want
10 Employers should
be required to make a pension available but not
to contribute into it
Employers should not be required to provide pensions but should
provide information on how to plan for retirement
Chart 16 Most young workers feel that their employer should provide some kind of pension Q In the future what if anything should employers do to help people plan for retirement
Base 20-29 year olds
Are other workplace benefits more important Younger workers were asked to rate the importance of various workplace benefits The results reveal how highly they value the
elements of their compensation package Chart 17 shows that 87 of young employees believe a workplace retirement plan with
employer contributions would be an important factor when choosing their next job While retirement may be decades away for
twentysomethings 80 believe programs provide for a phased retirement are important
23 | The Young Pragmatic and Penniless Generation
Basic salary 94
93 Holiday entitlement
91 Overtime and bonus pay
91 Location of workplace
88 Medical health insurance
87 Opportunities for career progression
Access to a workplace retirement plan with employer contributions 87
Access to good training provision 86
Flexible working hours 85
Life insurance (death in service benefits) 81
Phased retirement or other employer programs providing for a transition into retirement 80
Ability to work past the normal retirement age 70
Access to a workplace retirement plan without employer contributions
67
Employee stock plans 65
Access to creche help with the cost of childcare 59
Opportunities for foreign travel 50
Company car 43
Chart 17 Workplace retirement plans are a relatively low priority for younger workers when choosing a job How important to you would the following workplace benefits be if you were choosing your next job
ase 20-29 year olds
Q
B
Regarding workplace benefits provided by employers today considered just enough to fulfill basic needs and in China a
young employees are about as likely as all workers to be offered fully formed nationwide retirement system is still some way off
retirement tools such as annual plan statements and online The future shape and affordability of these plans is debated in
tools from their employer though it is concerning that 24 do all of the sur vey countries to var ying degrees
not know if such tools are available or not Those provided are
considered helpful Younger workersrsquo views on reform are important because
changes to government retirement benefits are more likely
The role of government to affect them than any other part of the working population
The generosity of government retirement benefits varies The main concern cited by 57 is of facing less generous
considerably in the countries sur veyed In some countries such government retirement benefits than those enjoyed by their
as France government benefits are the primar y mechanism parentsrsquo generation
for funding retirement while in the United Kingdom they are
The Young Pragmatic and Penniless Generation | 24
The government should reduce the overall cost of state pension provision by
reducing the value of Donrsquot know individual pension plans
25 22
4 The government should not do anything State pension provision will
remain perfectly affordable in the future
28
21 The government should increase overall funding
available for the state pension through
raising taxes
The government should take a balanced approach with some reductions in individual payments and
some increases in tax
Chart 18 Young workers think that the government retirement system will need to be reformed Q With the cost of government retirement benefits becoming a greater concern as people live longer which
if any of the following do you think the government should undertake
Base 20-29 year olds
The younger generation believes that the government cannot What do young employees look for in a retirement product continue to provide as it does now ndash just 4 think government The sur vey findings show that young employees have
benefits will remain affordable to society However there is no reser vations about employer and government retirement
consensus on what governments should do to reform retirement benefits So what then do they want from a private savings
plan systems Over a fifth (22) think retirement entitlements product The savings product feature most valued by younger
should be cut just over a fifth (21) think governments should workers is protection against investment risk (Char t 19)
raise taxes and more than a quarter (28) think a mixture of This may be in the form of no loss of initial investment a
the two is the best solution Another quarter admits that they guaranteed income stream or protection against inflation
donrsquot know what should be done This is reasonable ndash the initial investment of those farthest
from retirement is most at risk However less consideration
is given to savings grow th through investment returns This
suggests that there is an oppor tunity to educate young
workers about the trade-off between returns and risk
management and what they stand to gain
25 | The Young Pragmatic and Penniless Generation
Chart 19 Products which protect against investment risk are the most important to young workers ( interested) Q Thinking about the types of financial products you could purchase to help provide you with security in retirement on a scale of 1 to 5
how interested are you in the following options
Base 20-29 year olds
A product providing a guaranteed retirement income stream or lifetime income in retirement 82
A product which protects my retirement income against inflation 81
A product which guarantees that I donrsquot lose my initial investment 81
A product which helps meet the cost of long-term care if I become unable to look after myself 80
A product which protects my capital from poor investment returns 79
A product which generates a retirement income and allows me to take a lump sum from the investment should I need to 79
A product where the annual management charges are kept low 78
A product which enables me to keep some control over how my savings are invested during my retirement 77
A product which manages the asset allocation so that I am never exposed to a level of risk Irsquom not comfortable with 76
A product which continues to provide a retirement income to my spouse in the event that I die first 75
A product which protects my family against having to pay estate taxes when I die 72
A product which locks in investment returns during the good years 70
The lsquodefined ambitionrsquo retirement system in This removes some of the disadvantages of leaving
the Netherlands a sustainable retirement solution retirement liabilities exclusively up to employers
for young workers (defined benefit) or employees (defined contribution)
In the Netherlands as elsewhere young workers are faced In the Netherlands this is likely to involve legislation which
with an increasing retirement age decreasing government lets retirement funds automatically adjust pay-outs and
suppor t for retirement and declining traditional defined retirement age as life expectancy changes xii
benefit employer retirement plans Reforms proposed
by the Dutch may show a way for ward for all mature and This model has garnered interest elsewhere In the
aging economies United Kingdom Pensions Minister Steve Webb expressed
interest on a more limited scale with a government
rsquoDefined ambitionrsquo proposes that risks are not taken on fully guarantee for a minimum rate of return for defined
by either employer or employee but are shared contribution retirement plans
The Young Pragmatic and Penniless Generation | 26
Recommendations Enabling young workers to save The studyrsquos findings reveal that the majority of young workers (66) are either saving consistently or aspire to start saving but face challenges including debt low pay and funding for significant life events and generational changes to the economic landscape and government and employer support If young people are to achieve a prosperous retirement their willingness to save should be met with better opportunities to save Here is what can be done by employers governments and young people themselves to address retirement planning concerns for younger adults
27 | The Young Pragmatic and Penniless Generation
Individuals Employers and governments
Determine how much income you need in retirement Auto-enroll employees into a workplace retirement plan Young people accept the need to save for retirement but donrsquot If an auto-enrollment workplace retirement plan is feasible
know how to act on that need They can become more retirement this can play a major role in getting young workers saving early
savvy simply by talking to friends and family (as do 24 of and regularly Combined with auto-escalation (the automatic
our respondents already) or employers going online to use annual increase in retirement plan contributions) and matching
retirement calculators or reading the personal finance media contributions it can lead to greater retirement readiness
Seek out a financial advisor Provide more flexible savings products through the workplace Young people are faced with life events that make it easy to Not all savings journeys start with a retirement plan particularly
feel overwhelmed by financial priorities in addition to retirement for young people who may think of retirement as lsquotoo far awayrsquo
planning Soliciting advice from a finance professional early in Employers can kick-start the savings habit in younger workers
life (17 of young employees have done so already) helps with by providing flexible easy to access and easy to understand
planning and priorities and making sense of long-term finances savings plans as a more attractive starter option
Start saving now and save consistently Make company retirement plans more portable As with all employees young people will strengthen their Young people move jobs much more often than previous
retirement readiness simply by saving regularly Today only 25 generations of employees so savings like DC retirement plans
of young people always save yet even small regular amounts need to follow employees when they change jobs
will improve retirement readiness over time
Make tax incentives more effective Ask your employer about workplace retirement savings plans All countries encourage long-term savings through tax relief but
and other retirement benefits young people often arenrsquot aware of this or donrsquot understand it
While one third (33) of young people believe that a workplace A more targeted system of tax relief could help provide clearer
retirement savings plan provides a major opportunity to start and simpler signals to younger people about the financial
saving employers often experience difficulties in engaging benefits of long-term saving
younger employees in discussions about retirement planning
The workplace is an important channel for achieving retirement Make better financial education central to the workplace readiness so be sure to max out on any employer contributions retirement offer
Young people who aspire to save may be prevented from
doing so by setting the wrong financial priorities Workplace
retirement education ndash alongside professional advice ndash can help
guide young people toward the right long-term priorities at an
earlier age in life
The Young Pragmatic and Penniless Generation | 28
29 | The Young Pragmatic and Penniless Generation
Glossary
Aegon Retirement Readiness Index (ARRI) c areer average retirement plan The ARRI assesses the relative levels of retirement A type of defined benefit plan that is based on an
preparedness of employees across different countries on a employeersquos average retirement earnings over the duration
scale from 1 to 10 The Index is based on three questions of plan membership Same as average salary plan
covering attitudes and three questions covering behaviors
defined ambition (DA) plan average salary plan A type of retirement plan in which retirement plan risks
A type of defined benefit plan that is based on an are shared between the employer and the employee
employeersquos average retirement earnings over the duration It offers greater certainty to savers around the final value
of plan membership Same as career average plan of their retirement assets than in DC plans and less
cost volatility for employers than with DB plans In the
a nnuity Netherlands Defined Ambition (DA) retirement plans are
A form of contract sold by life insurance companies that being introduced in order to help relieve the pressure on
guarantees a fixed or variable payment to the annuitant employers while still trying to provide employees with a
at some future time usually retirement All capital in the more secure retirement plan The United Kingdom too is
annuity grows tax-deferred looking at DA retirement plans as a solution
auto enrollment defined benefit (DB) plan An employer-sponsored retirement plan in which the An employer-sponsored retirement plan where the amount
employer is able to enroll an employee without that of future benefits an employee will receive from the plan is
employeersquos express authorization The employer determines defined typically by a formula based on salary history and
what percentage of the employeersquos salary or wages is years of service The amount of contributions the employer
contributed to the plan The employee is able to change is required to make will depend on the investment returns
this percentage and can opt out of enrollment in the plan experienced by the plan and the benefits promised
Contrast defined contribution plan
a uto-escalation A feature of a plan which automatically increases the defined contribution (DC) plan percentage of (retirement) funds saved from salary An employer-sponsored retirement plan such as a 401(k)
This feature generally uses a default or standard plan or a 403(b) plan in the United States in which
contribution escalation rate contributions are made to individual participant accounts
Depending on the type of DC plan contributions may be
B aby Boomers made by the employee the employer or both
A term used to refer to people generally born between
the end of World War II in 1945 and the mid 1960s The employeersquos benefits at retirement or termination of
Other generations Silent Generation - the generation born employment are based on the employee and employer
between 1925 and 1945 Generation X - the generation contributions and earnings and losses on those
born between 1965 and 1979 Millennials or Generation contributions See also 401(k) and 403(b) plan
Y - the generation born between 1980 and 2000 and often Contrast defined benefit plan
classified as the children of Baby Boomers
The Young Pragmatic and Penniless Generation | 30
401(k) plan An employer sponsored retirement plan that enables
employees to make tax-deferred contributions from their
salaries to the plan
403(b) plan An employer-sponsored defined contribution plan that
enables employees of universities public schools and
non-profit organizations to make tax-deferred contributions
from their salaries to the plan
final salary plan A type of defined benefit plan in which retirement
benefits are based on final retirement salary in the years
immediately before retirement benefits are received
Millennials A term used to refer to the people born from about 1980
to 2000 brought up using digital technology They are
often classified as the children of Baby Boomers
r etirement (or pension) plan Provides replacement for salary when a person is no
longer working due to retirement In the case of a defined
benefit retirement plan the employer or union contributes
to the plan which pays a predetermined benefit for the
rest of the employeersquos life based on length of service and
salary Payments may be made either directly or through
an annuity Retirement plan payments are taxable income
to recipients in the year received The employer or union
has fiduciary responsibility to invest the retirement plan
funds in stocks bonds real estate and other assets earn
a satisfactory rate of return and make payments to retired
workers Retirement plan funds holding trillions of dollars
are one of the largest investment forces in the stock
bond and real estate markets If the employer defaults in
the United States retirement plan payments are usually
guaranteed by the Pension Benefit Guaranty Corporation
(PBGC)
variable annuities (VA) An insurance contract in which the insurance company
guarantees a minimum payment at the end of the
accumulation period The payments may vary depending
on the financial performance of the managed portfolio
31 | The Young Pragmatic and Penniless Generation
About Aegon Transamerica Center for Retirement Studiesreg and Cicero Consulting
Aegon Transamerica Center Aegon is an international life insurance pensions and asset reg management company with businesses in over 20 markets for Retirement Studies in the Americas Europe and Asia Aegon companies employ The Transamerica Center for Retirement Studiesreg (TCRS) is
around 24000 people and serve millions of customers a division of the Transamerica Institute a nonprofit private
worldwide foundation TCRS is dedicated to educating the public on
wwwaegoncom emerging trends surrounding retirement security in the
United States TCRSrsquo research emphasizes employer-sponsored
In 2010 Aegon became a founding member of the Global retirement plans issues faced by small to mid-sized companies
Coalition on Aging which seeks to raise awareness of aging and their employees and the implications of legislative and
issues among policymakers and the general public A major aim regulatory changes Transamerica Institute is funded by
of the coalition is to transform the way we think and speak contributions from Transamerica Life Insurance Company and
about aging replacing the familiar rhetoric of lsquoproblemsrsquo with its affiliates and may receive funds from unaffiliated third-
a more positive discussion of lsquopossibilitiesrsquo and lsquoopportunitiesrsquo parties For more information about TCRS please refer to
wwwglobalcoalitiononagingcom wwwtransamericacenterorg
Cicero Consulting A leading consultancy firm serving the banking insurance and
asset management sector Cicero specializes in public policy
and communications consulting as well as global thought
leadership and independent market research Cicero was
established in 2001 and now operates from offices in London
Brussels Washington and Singapore As a market leader in
pensions and retirement research Cicero designed
and analyzed the research and contributed to the report
wwwcicero-groupcom
The Young Pragmatic and Penniless Generation | 32
Marta acebo Mark Green Patricia Plas
Paula alvarez douGlas henck scott roane
Frits bart wendel hoFMan thurstan robinson
Grace basile
lynette belFry
andrew berwick
Frans van der horst
tatsuo kai
herMan kaPPelle
Patti rowey
sarah russell
Joost van schaGen
robin boon Gaacutebor kePecs dick schiethart
bert-JaaP brons Marco keiM erik schouten
douG brooks
libby buet
kent callahan
JaiMe kirkPatrick
bas knol
roGer koch
anGela seyMour Jackson
kate sMith
renske stoker
Jeanne de cervens
dana chen
Peter kunkel
alexander kuiPers
eyleen sun
MartiJn tans
arkadiusz chMurzynski
heidi cho
brian lewis
Mike linder
GreG tucker
Mark twiGG
siMon clow siMon luke catherine wanG
robert colliGnon Jason Ma Marc van weede
catherine collinson GrzeGorz Mathea tiM willaert
wendy daniels
Michel denizot
edit drevenka
Paul Middleton
takaoh MiyaGawa
david Moulton
daniel wriGht
alex wynaendts
MacieJ zaPala
Jan driessen
kelly Fu
adrian Grace
Mark Mullin
Marcelle noltenius
stiG nybo
Peacuteter zatykoacute
vicky zeldin
Disclaimer This repor t contains general information only and does
not constitute a solicitation or offer No rights can be
derived from this repor t Aegon its par tners and any of
their affiliates or employees do not guarantee warrant
or represent the accuracy or completeness of the
information contained in the repor t
Acknowledgements
33 | The Young Pragmatic and Penniless Generation
References and notes i For a comparison of different retirement systems see lsquoPensions at a Glance 2011rsquo OECD 2011 ii As the survey was carried out online the survey results in China are based toward people living in urban areas iii ldquoPensions Marketsrdquo TheCityUK March 2013 p9 iv Global Employment Trends for Youth 2013 A generation at risk International Labour Organisation 2013 p2 v Eurostat July 2013 vi OECD Employment and Labour Markets Key Tables from OECD No 2 2012 vii The Federal Reserve Bank of New York 2012 Quarterly Report on Household Debt March 29 2013 viii World Bank ix lsquoWorld-class povertyrsquo The Economist February 27 2013
httpwwweconomistcomblogsanalects201302chinas-poor x lsquoThe Chinese slow down in char tsrsquo The Economist July 15 2013 xi lsquoChina rsquos welfare system difficult inflexible and blatantly unfairrsquo The Guardian April 23 2013
httpwwwtheguardiancomglobal-development2013apr23china-welfare-system-inflexible-unfair xii lsquo The Dutch experience with Defined Ambition pensions and the impact on companiesrsquo Aegon Global Pensions March 12 2013
httpwwwaegonglobalpensionscomenHomePublicationsNews-archiveNewsThe-Dutch-experience-with-Defined
Ambition-pensions-and-what-that-may-mean-for-companies-in-the-Netherlands-and-the-UK
shy
The Young Pragmatic and Penniless Generation | 34
Contact information HE ADQUARTER S
Aegon NV
PO Box 85
2501 CB The Hague
Telephone +31 70 344 32 10
w w waegoncom
MEDIA REL ATIONS
Telephone +31 70 344 89 56
Email gcc-iraegoncom
Countr y Index score
Germany 548
China 541
Canada 524
United States 519
The Netherlands 488
United Kingdom 486
Sweden 483
France 475
Hungar y 473
Poland 463
Spain 440
Japan 430
Total 489
Appendix 1 Aegon Retirement Readiness Index (ARRI) - technical note
Aegon Retirement Readiness Index (ARRI)-technical note 2013 Weightings (2012 in brackets) A sample of 12000 pre and post retirees was drawn from 1 Personal responsibilit y 20 (30)
twelve countries Of these 10800 (90) were pre-retirees 2 Level of awareness 30 (35)
and these were chosen for fur ther analysis of their plans 3 Financial capability Understanding 30 (25)
for retirement The Index that was developed forms an 4 Retirement planning 50 (50)
assessment of how well an individual perceives the adequacy 5 Financial preparedness 60 (60)
of his her own finances and financial awareness specifically 6 Income replacement 35 (35)
for addressing his retirement needs
Note that the weights devised to show the relative
The lsquotargetrsquo for the Index impor tance of each question in calculating the Index add to
The question on current savings activity was designated as the 225 These were then re-scaled so that a final scale of 1 to
target question (dependent variable) for predicting the level of 10 was calculated
preparedness for retirement Responses to this question were
then correlated with each of the six key questions (variables) Final scores by country below to understand which were driving the activity These weightings were multiplied by the actual scores for each
This was done because it was not felt to be correct to give respondent for each of the six Index questions and aggregated
each of the six variables described below an equal weight as to obtain a provisional score This was then adjusted to
they appeared to have quite different relationships to the give countr y scores out of 1 to 10 (A score of 1 to 10 had
target question sufficient differentiation to be used as the scale for analysis)
1 Personal responsibilit y for income in retirement
2 Level of awareness of need to plan for retirement
3 F inancial capability Understanding of financial matters
regarding plans for retirement
4 Retirement planning Level of development of plans
5 Financial preparedness for retirement
6 Income replacement Level of projected income replacement
The weighting To estimate the statistical significance of the decline in overall
scores in this yearrsquos Index is theoretically incalculable
Two things have changed from 2012 to 2013
1 C anada and China have joined the sample
2 The new countries have thus influenced the weights of
emphasis placed on the 6 variables used to calculate
the score hence the weights attached to the complex
calculation have changed
However it is noticeable that for countries which were sampled
in both time periods the mean scores for the six individual
variables have almost invariably declined and on average more
than half of them have shown a significant level of decline
In particular the question lsquoDo you think you will achieve this
incomersquo has for all countries shown a significant level of
decline We thus hypothesize that the comparative results
show a significant decline
The Young Pragmatic and Penniless Generation | 36
Net
herl
ands
Net
herl
ands
Net
herl
ands
Ger
man
yG
erm
any
Ger
man
yBase 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
Better off 7 4 23 Sw
eden
Swed
en11 5 7 8 3 11 14 50 5
Swed
en
About the same 19 18 27 23 8 19 18 13 29 29 24 21 U
ntie
dU
ntie
dU
nite
d Worse off 66 74 41 58 79 69 71 76 51 47 21 55
Kin
gdom
Kin
gdom
Kin
gdom
Donrsquot know 9 3 9 9 9 4 4 8 9 10 6 19
Fran
ceFr
ance
Fran
ce
Chart 2 Education of 20 ndash 29 year olds by country Q Please choose from the following list the highest level of educational or professional qualification you have
Spai
nSp
ain
Spa
in
Pol
and
Pol
and
Pol
and
Hun
gary
Hun
gary
Hun
gar y
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
dU
nite
d 100 100 100 100 100 100 100 100 100
Stat
es100 100 100
Stat
esSt
ates
Less than high school graduate 2 44 6 14 1 3 2 7 1 3 Ca
nada
Cana
daC
anad
aHigh school graduate 11 33 53 23 22 22 4 41 14 21 1 2
Some college or trade school 46 2 9 9 9 19 37 14 28 20 4 33 Ch
ina
Chin
aC
hina
College degree University degree 31 15 27 30 41 43 21 33 50 46 9 57
Postgraduate degree or 8 3 3 23 25 11 36 1 8 9 80 6 qualification Ja
pan
Japa
n Ja
pan
Other 2 4 1 1 1 2 0 5 0 6 2
None 0 1 1 0 1 0 0
NET Less than undergrad degree 61 82 70 47 34 46 43 66 42 45 11 37
NET Undergrad degree or higher 39 18 30 53 66 54 57 34 58 55 89 63
Chart 3 Aegon Retirement Readiness Index scores for young employees by country
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
NET Low Index (0-5) 80 64 79 81 85 78 81 73 65 61 61 87
NET Medium Index (6-7) 15 30 18 15 14 21 17 23 25 31 31 12
NET High Index (8-10) 4 6 3 3 1 2 2 4 10 8 7 1
Appendix 2 Country comparisons Chart 1 The majority of young employees believe that they will be worse off in retirement compared to their parents Q Do you think that future generations of retirees will be better off or worse off than those currently in retirement
37 | The Young Pragmatic and Penniless Generation
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsI always make sure that 27 34 27 26 17 14 19 22 35 33 32 20 I am saving for retirement
I only save for retirement G
erm
any
Ger
man
y21 27 20 13 17 21 16 6 17 24 20 24 occasionally from time to time
I am not saving for retirement now 6 11 8 11 5 15 9 4 10 8 9 5 although I have in the past Sw
eden
Swed
en
I am not saving for retirement 35 23 34 46 53 40 49 54 36 33 38 46 though I do intend to U
nite
dU
ntie
dK
ingd
omK
ingd
om I have never saved for retirement and 11 6 10 5 8 10 6 13 3 2 1 6 donrsquot intend to
Fran
ceFr
ance
Chart 5 Younger people are more likely not to be using any means of retirement savings Sp
ain
Spai
nQ Which financial means if any are you currently using to prepare for your retirement
Pol
and
Pol
and
only asked in Germany only asked in Spain
Hun
gary
Hun
gary
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
dSt
ates
Stat
es100 100 100 100 100 100 100 100 100 100 100 100
Defined benefit plan 16 10 25 29 15 3 76 11 20 13 5 Ca
nada
Cana
daDefined contribution plan 28 10 17 19 19 14 10 23 40 7 3
Private pension 8 18 14 10 5 9 4 13 12 40 66 4 Ch
ina
Chin
a Government pension social security 12 43 14 21 8 7 4 18 27 33 71 35
Stocks 5 12 14 7 4 17 7 2 13 10 23 9
Bonds 1 8 5 6 2 16 4 2 8 13 14 3 Ja
pan
Japa
n
Mutual funds 2 14 23 4 2 10 3 4 7 16 9 6
Investment insurances (annuities) 2 3 2 3 2 9 4 5 2 4 6 1
Savings accounts 23 37 38 25 23 6 29 15 36 37 65 36
Investment property 2 10 6 7 9 2 5 2 5 11 18 1
Employee stock purchase 1 1 1 4 1 29 0 4 1 7 1
My home 10 5 8 7 7 8 4 6 6 14 30 1
Reverse mortgage 1 4 2 4
My business 2 1 3 2 2 4 1 1 2 4 12 1
Inheritance 3 11 7 11 7 9 9 8 7 9 6 2
Annuities 1 15 2 2 1 4 3 2 1 2 8
Long-term care insurance 2 1 3 2 9 5 1 6 4 7 1
Life insurance 6 11 8 8 14 3 18 15 19 18 36 17
Unterstuumltzungskasse aus 2 Eigenmitteln finanziert
Unterstuumltzungskasse vom 2 Arbeitgeber finanziert
Chart 4 Younger employees are much more likely to aspire to save for retirement Which of the following best explains your approach to saving for retirement This can include money you contribute to any long-term
investment including pensions stocks and shares investment-linked insurances property etc
Q
The Young Pragmatic and Penniless Generation | 38
Plan de empleo mixto 2 (combinacioacuten de las dos anteriores)
Other 1 6 4 0 1 2 2 3 2 2 3 3
None nothing 8 14 12 23 25 31 6 27 21 17 3 24
Donrsquot know 29 6 17 13 19 8 4 9 7 7 0 9
hart 6 The younger generation has more negative associations of retirement Which if any of the following words do you most associate with retirement
Net
herl
ands
Net
herl
ands
Ger
man
yG
erm
any
Swed
enSw
eden
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
d100 100 100 100 100 100 100 100 100 100 100 100
Kin
gdom
Kin
gdom
Freedom 35 32 36 39 19 26 11 20 35 40 37 33
Opportunity 7 27 25 18 4 8 9 10 17 16 9 16 Fr
ance
Fran
ceLeisure 58 48 36 41 23 24 43 32 50 50 55 6
Excitement 2 5 3 8 2 6 1 2 17 17 4 3 Sp
ain
Spai
nPoverty 11 26 23 11 26 14 37 44 7 5 6 20
Insecurity 34 24 18 16 20 18 35 56 10 9 18 44 P
olan
dP
olan
dLoneliness 4 10 17 16 12 7 11 8 5 9 20 12
Ill health 2 19 7 14 15 9 49 23 6 6 29 11 H
unga
ryH
unga
ryDependent on others 11 11 5 18 14 8 18 19 14 6 11 4
Tired 3 4 8 10 14 10 17 6 7 7 13 19 U
nite
dU
nite
dFar away 38 19 25 21 61 32 2 13 33
Stat
es33 14 22
Stat
es
Boredom 14 16 6 12 16 12 15 8 12 12 16 17 Ca
nada
Cana
daEnjoyment 21 16 17 23 14 29 5 3 37 37 35 15
None of the above 0 1 1 2 0 2 1 1 2 2 1 2
Donrsquot know 2 2 3 3 2 2 1 2 0 Ch
ina
6 Ch
ina
hart 7 Many young employees think they are not on course to achieve target retirement income Ja
pan
Japa
n Do you think you will achieve this income [your estimated income needed in retirement]
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
I donrsquot know if I am on course to 56 37 57 59 50 39 49 48 48 41 22 68 achieve my retirement income
No I am on course to achieve around one-quarter (25) of my 10 14 9 13 15 14 14 13 10 10 10 7 retirement income
No I am on course to achieve around 12 20 14 11 19 19 18 15 12 11 23 12 half of my retirement income
No I am on course to achieve around three-quarters (75) of my 8 14 7 4 8 15 9 8 6 11 20 5 retirement income
Yes I am on course to achieve my 15 15 13 14 8 13 11 17 25 27 25 8 retirement income
CQ
CQ
39 | The Young Pragmatic and Penniless Generation
Chart 8 Young people in most countries expect to retire before 65 Q At what age do you expect to retire from all paid employment
Net
herl
ands
Ger
man
y
Swed
en
Uni
ted
Kin
gdom
Fran
ce
Spai
n
Pol
and
Hun
gary
Uni
ted
Stat
es
Cana
da
Chin
a
Japa
n
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
40 or under 0 1 1 0 0 1 3 1 5 12
41-50 1 2 3 5 2 2 6 3 9 4 37 9
51-59 4 4 4 6 2 4 11 5 7 10 30 1
60 5 11 8 12 10 13 19 12 12 16 21 27
61-64 2 11 10 2 20 7 4 13 5 3 1 2
65 17 22 44 31 34 32 16 26 26 32 3 25
66-69 42 32 15 9 12 29 20 13 9 9 0 1
70 19 11 10 18 10 5 10 9 13 12 0 6
71+ 5 5 5 9 4 5 5 3 7 5 1 4
Never 2 1 1 2 2 2 6 4 1 0 0
Donrsquot know 2 3 2 5 3 2 8 9 5 5 1 13
Mean 67 65 65 65 64 65 63 64 63 64 53 59
Median 67 65 65 65 65 65 65 65 65 65 55 60
Chart 9 Younger employees feel they donrsquot have money to invest for retirement Q What is the single biggest obstacle to you saving for retirement right now
Net
herl
ands
Ger
man
y
Swed
en
Uni
ted
Kin
gdom
Fran
ce
Spai
n
Pol
and
Hun
gary
Uni
ted
Stat
es
Cana
da
Chin
a
Japa
n
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
The uncertain economic environment 19 8 13 9 13 19 11 14 12 9 29 27
Lack of money to invest 28 41 33 43 47 34 48 55 47 50 6 19
Fear of poor investment returns over the coming years 2 5 10 7 5 6 8 2 6 8 14 6
Complexity of investment products 4 4 4 3 5 3 5 2 12 5
I donrsquot know how to go about investing for the long-term 2 3 10 8 5 5 3 3 6 8 7 9
The fees charged by financial services companies 2 4 4 2 4 3 4 2 3 5 2 5
I canrsquot afford to take financial advice 3 3 6 8 2 4 3 5 3 2 3 2
I donrsquot trust the financial services industry 12 11 8 6 5 10 6 2 2 3 5 4
I donrsquot see the need to save for the long-term 6 1 2 2 3 3 3 1 2 1 4 3
Concerns about unstable currencies currency fluctuations 2 5 1 3 3 3 4 3 4 5 15 2
Other (PLEASE STATE) 3 3 1 1 3 2 4 6 2 2 1
Donrsquot know 17 12 11 7 8 6 3 6 8 6 3 17
The Young Pragmatic and Penniless Generation | 40
Chart 10 More money would incentivize young employees to save for retirement Q Which if any of the following would encourage you to save for retirement
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsMore generous tax breaks on long-term savings and pensions 20 44 30 32 27 23 42 42 33 43 40 32 products
Ger
man
yG
erm
any
Access to financial education so that I am more aware of what 24 6 14 21 16 22 21 12 23 24 43 25 I need to do for myself
Swed
enSw
eden
Access to professional financial advice so that I have personalized
Uni
ted
20 24 23 23 15 21 25 9 22 23 44 13 U
nite
drecommendations on what steps
Kin
gdom
Kin
gdom
I need to take
Simpler investment products that 12 33 19 28 20 Fr
ance
18 27 16 32 28 36 10 Fr
ance
I can understand with less jargon
Better and more frequent information about my retirement 16 28 20 27 27 23
Spai
n20 18 25 31 45 22
Spai
nsavings
Better legal protection in case I am 12 18 13 18 10 24 18 13 13 19 21 6 P
olan
dP
olan
dsold the wrong product
A pay rise 46 54 44 64 55 50 70 72 67 64 53 37
A better retirement plan pension H
unga
ryH
unga
ry27 32 25 33 29 26 42 35 39 44 33 32 match from my employer
Other 4 2 1 1 2 2 3 3 2 U
nite
d3 0
Uni
ted
Stat
esSt
ates
Donrsquot know 17 9 16 10 10 12 3 8 8 5 3 17
Not applicable - I already have 3 3 4 2 2 1 1 1 2 2 3 sufficient savings Ca
nada
Cana
da
Chin
aCh
ina
Chart 11 A majority of younger employees do not have a written plan for retirement Q Which of the following best describes your retirement planning strategy
Japa
n Ja
pan
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
I have a written plan 7 18 10 9 6 8 6 5 13 10 8 4
I have a plan but it is not written 24 47 37 25 23 31 29 31 37 44 55 24
down
I do not have a plan 61 32 51 61 62 55 62 58 45 42 34 61
Donrsquot know 7 3 3 5 8 6 3 6 4 4 3 12
41 | The Young Pragmatic and Penniless Generation
Chart 12 For young employees friends and family are the leading source of retirement savings information Q And which of these sources (of information) is most important to you
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
Bank adviser 6 11 19 5 25 5 7 4 3 17 10 2 N
ethe
rlan
dsN
ethe
rlan
dsProfessional financial adviser 12 22 10 12 10 19 19 22 21 25 19 10
Insurance agent spokesperson 3 10 2 3 1 3 6 2 3 0 3 2 G
erm
any
Ger
man
yInsurance company website 3 1 3 2 4 4 2 2 1 3 1
Personal finance websites online 8 5 7 8 5 4 10 8 12 6 10 8 retirement planning tools Sw
eden
Swed
enPersonal finance media 2 2 2 2 2 6 3 1 2 1 6 2
Government website 7 1 3 6 U
nite
d5 2 3 3 2 3 7 1
Uni
ted
Kin
gdom
Kin
gdom
Bank website 2 3 3 2 1 0 3 2 1 6 3 3
My employer 12 8 4 9 4 7 5 12 8 5 4 1 Fr
ance
Fran
ceAccountant 2 6 4 4 1 3 1 3 5 5 1 3
Lawyer 2 3 1 2 2 8 4 2 1 2 2 0 Sp
ain
Spai
nFriends and family 21 22 30 28 24 26 18 24 26 20 25 24
None of these P
olan
dP
olan
dNot applicable 21 7 16 18 19 13 17 15 14 9 5 41
Hun
gary
Hun
gary
Chart 13 Most young workers feel their employer should provide some kind of pension Q In the future what if anything should employers do to help people plan for retirement
Uni
ted
Uni
ted
Stat
esSt
ates
Cana
daCa
nada
Chin
aCh
ina
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 Ja
pan
Japa
n Employers should be required to 24 43 20 40 21 26 20 28 37 34 20 30 contribute to workersrsquo pensions
Employers should be required to make a pension available but not to 12 13 7 17 20 15 15 4 11 14 22 5 contribute into it
Employers should not be required to provide pensions but should 15 9 12 8 9 8 11 6 11 9 9 11 provide information on how to plan for retirement
Employers should provide a range of flexible benefits and 13 18 18 16 15 27 25 28 21 22 45 12 allow individuals to choose which benefits they actually want
Nothing ndash it should be left to individual employees to take care 2 2 5 1 4 3 3 5 6 5 1 9 of themselves
Nothing ndash it should be left to the government to take care of its 2 5 5 2 5 8 15 14 1 4 0 4 citizens
Donrsquot know 30 10 32 17 27 12 12 15 13 13 3 29
The Young Pragmatic and Penniless Generation | 42
Chart 14 Workplace pensions are relatively low down in young workersrsquo priorities when choosing a job Q How important to you would the following workplace benefits be if you were choosing your next job
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsBasic salary 86 93 88 91 88 92 90 94 90 93 96 94
Holiday entitlement 87 94 89 91 92 94 91 94 93 94 96 91 G
erm
any
Ger
man
yOvertime and bonus pay 86 93 87 88 89 90 89 94 90 91 97 90
Location of workplace 88 91 86 92 89 90 89 92 93 93 92 86 Sw
eden
Swed
enMedical health insurance 73 92 84 65 86 87 88 87 93 94 98 83
Opportunities for career progression 86 91 81 90 90 94 91 94 92 91 96 81 U
nite
dU
nite
dAccess to a workplace retirement 85 85 81 82
Kin
gdom
78 84 80 78 84 86 93 74 K
ingd
omplan with employer contributions
Access to good training provision 85 87 85 88 86 91 85 93 86 90 95 74 Fr
ance
Fran
ceFlexible working hours 79 87 58 86 81 89 81 87 91 91 92 57
Life insurance 72 75 79 69 80 82 Sp
ain
84 80 81 88 93 74 Sp
ain
(death in service benefits)
Phased retirement or other employer programs providing for 74 54 75 71 72 81 76 74 76 81 91 65
Pol
and
Pol
and
a transition into retirement
Ability to work past the normal 68 57 64 65 64 74 72 65 74 76 80 70 retirement age H
unga
ryH
unga
ry
Access to a workplace retirement 62 74 61 68 59 77 61 47 68 74 89 65 plan without employer contributions U
nite
dU
nite
dSt
ates
Stat
esEmployee share plans 50 72 54 65 59 73 61 51 64 73 91 55
Access to creche help with the 67 75 64 56 69 79 75 83 58 69 89 68 cost of childcare Ca
nada
Cana
da
Opportunities for foreign travel 53 54 60 55 50 71 58 66 57 61 79 37
Company car 51 46 45 47 49 63 51 49 36 49 69 Ch
ina
39 Ch
ina
Japa
n Ja
pan
Chart 15 Young workers think the state pension will need to be reformed Q With the cost of government pensions becoming a greater concern as people live longer which if any of the following do you think
the government should undertake
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
The government should reduce the overall cost of state pension 15 33 16 15 16 20 28 22 21 26 30 16 provision by reducing the value of individual pension plans
The government should increase overall funding available for the 12 21 30 22 14 34 19 26 21 18 29 10 state pension through raising taxes
43 | The Young Pragmatic and Penniless Generation
he government should take a alanced approach with some 27 26 12 30 28 23 24 16 34 31 38 41 eductions in individual payments nd some increases in tax
he government should not do nything State pension provision 7 2 12 5 3 4 3 3 5 4 0 5 ill remain perfectly affordable in he future
onrsquot know 38 19 29 29 39 20 26 34 19 21 4 28
Net
herl
ands
art 16 Products which protect against investment risk are the most important to young workers ( interested) Thinking about the types of financial products you could purchase to help provide you with security in retirement on a scale of 1 to 5
how interested are you in the following options G
erm
any
Swed
en
Uni
ted
Kin
gdom
ase 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 Fr
ance
100 100 100 100 100 100 100 100 100 100 100 100
product providing a guaranteed etirement income stream or 75 81 73 76 74 83 78 76 87 85 94 69
Spai
nifetime income in retirement
product which protects my 74 79 73 76 72 82 77 74 84 86 94 65 etirement income against inflation P
olan
d
product which guarantees that I 72 82 73 78 75 81 76 73 86 86 90 67 onrsquot lose my initial investment H
unga
ry product which helps meet the ost of long-term care if I become 74 79 74 77 70 79 76 71 86 85 84 66
Uni
ted
nable to look after myself St
ates
product which protects my capital 71 81 71 76 68 76 77 73 84 83 93 65 rom poor investment returns Ca
nada
product which generates a etirement income and allows 69 78 71 75 68 81 77 72 84 86 94 70 e to take a lump sum from the
Chin
anvestment should I need to
product where the annual 66 78 68 75 72 79 77 70 85 86 87 64 anagement charges are kept low Ja
pan
product which enables me to eep some control over how my 71 73 70 75 72 80 75 69 88 85 91 63 avings are invested during my etirement
product which manages the sset allocation so that I am never 68 70 67 73 66 76 71 67 80 83 95 60 xposed to a level of risk Irsquom not omfortable with
product which continues to rovide a retirement income to my 74 78 71 75 73 81 79 73 86 82 94 60 pouse in the event that I die first
product which protects my family gainst having to pay estate taxes 73 76 71 74 75 81 75 69 82 82 89 56 hen I die
product which locks in investment 72 71 63 73 64 71 59 56 81 84 89 61 eturns during the good years
Tbra
Tawt
D
ChQ
B
Arl
Ar
Ad
Acu
Af
Armi
Am
Aksr
Aaec
Aps
Aaw
Ar
The Young Pragmatic and Penniless Generation | 44
Foreword The Changing Face of Retirement The Young Pragmatic and
Penniless Generation sets forth some of the key challenges facing
young adults as they seek to balance their immediate financial
pressures with the goal of planning for retirement The sur vey
was based on 10800 employees in 12 countries worldwide and
included 2722 employees between the ages of 20 and 29
With over half of young people today expecting to be worse off
in retirement compared to their parentsrsquo generation the current
generation of people in their twenties find themselves faced with
particular challenges in saving for later life
We are all living through a period of rapid and unprecedented
economic and social change Nowhere is this change felt more
than among young adults who are whether they realize it or not
forging a brave new world one which is highly educated high
tech and well traveled Yet in this world of new opportunities
many young people are financially stretched The ongoing global
economic downturn has created a highly uncertain financial
outlook with historically high levels of youth unemployment
and personal debt (particularly student debt) and competing
pressures on young adults to establish themselves in the world
of work while starting a family and planning for the long-term
At the same time governments and employers are busy
introducing pension reforms which place greater financial
responsibilities on younger people to fund their own retirement
Faced with this challenge our research finds that the aspiration
to save for retirement remains surprisingly strong for employees
in their twenties One quarter are saving already and almost half
would like to begin As the squeeze on household incomes places
constraints on their ability to save it is necessary to improve
access to retirement products preferably with clear tax benefits
and to better financial education and advice Likewise the
retirement system itself must address the increasing pragmatism
of young people who favor a more flexible transition into
retirement which strikes a balance between work and leisure
The role for governments employers and the retirement savings
industry is to put in place the right conditions to ensure that such
constraints are overcome and retirement aspirations are realized
It is our hope that the insights gained from the Aegon Retirement
Readiness Sur vey 2013 will contribute toward retirement
solutions which better fit the ever-changing lives of young adults
Marc van Weede Executive Vice President Head of Sustainability Aegon NV
Catherine Collinson President Transamerica Center for Retirement Studies
Mark Twigg Executive Director Cicero Group
1 | The Young Pragmatic and Penniless Generation
Summary Todayrsquos world is changing rapidly The pace of change is felt by none more than the twentysomething generation whose world has been transformed by developments such as the Internet the rise of social media the onset of affordable air travel and the rapid expansion of higher education Furthermore economic growth in developing markets has transformed the opportunities and outlook of millions of young people in what were once low-income countries particularly in China one of our survey countries
The Young Pragmatic and Penniless Generation | 2
Opportunities and obstacles Young employees are realists in a changing world This changing world presents young people with many Working adults between the ages of 20 and 29 expect to
opportunities but also with uncertainties and obstacles which be worse off financially in retirement than their parents (59)
impact their financial planning and long-term financial security and take on more financial responsibility including funding their
Cast-iron government and employer retirement benefits are own retirement Additionally 37 believe that they will likely
less prevalent than before and have given way to a more fall short of their retirement needs Furthermore 27 believe
individualistic approach based on personal responsibility that their retirement shortfall will be large at least half of what
In an uncertain labor market employment is less secure Todayrsquos they estimate they will need in retirement As a result 44 are
employees switch employers take career breaks and undertake pessimistic that they will not be able to choose when to retire
periods of self-employment or contract work A steady salary a luxury enjoyed by many of their parents Another factor is the
progression has become the exception rather than the rule financial impact of caring for the older generation with 28
Major life goals such as education funding and home ownership expecting to provide financial support for retired parents
are more costly and harder to achieve than in previous and 40 agreeing that lsquoadult children of retirees should
generations and also compete with retirement funds In this help provide financial support for their parents if neededrsquo
new reality there is a clear role for employers and retirement
providers supported by government to embrace young Forecasts support such pragmatism Today the average
employeesrsquo willingness to take control of their financial future retirement age is around 63 years but by 2050 when those
in their twenties today will be entering retirement the official
Key findings retirement age of many countries will be an average of
The Changing Face of Retirement The Young Pragmatic 67 to 68 years due in part to increased longevity an aging
and Penniless Generation reveals a retirement shortfall for workforce and receding government benefits In addition
employed young adults between the ages of 20 and 29 that youth unemployment is at historically high levels In Spain this
is due to a lack of opportunity to save rather than a lack of stands at 53 for 15 to 24 year olds the highest of our survey
will A range of uncertainties and obstacles some driven by life countries followed by Hungary (28) and Poland (27)
stage many generationally unique conspire to make saving for
retirement harder today than it was for older generations Young employees are ready to do what it takes to save for Young employees recognize these challenges and are prepared their retirement to take responsibility for the solution To do this they require A surprising and encouraging two-thirds of young employees are
employers retirement providers and governments to provide committed to or have the ambition to save for their retirement
suitable financial expertise knowledge and products A core 25 of young employees are habitual savers who lsquoalways
make surersquo that they are saving for retirement and a highly
encouraging 41 of young employees are lsquoaspiringrsquo savers
who intend to save Furthermore the need to save is widely
recognized ndash 57 of young employees believe that retirement
savings are important but not a priority for them at the moment
Taken together these findings suggest that many young
employees are prepared to lsquoownrsquo the retirement problem
having accepted the new reality perhaps more readily than
some older employees
3 | The Young Pragmatic and Penniless Generation
Aspiring savers unable to meet their savings goals can be Young employees can meet their retirement goals and turned into habitual savers with better educational support aspirations with access to flexible financial products which advice and information suit the life they lead The survey reveals that a significant percentage of younger Todayrsquos young employees require flexible savings products
employees (47) do not know if they are on course to achieve such as more portable retirement benefits and other workplace
their desired retirement income ndash a lack of insight into the savings offerings which move with them between employers
future which may contribute to savings inertia Addressing and across different life stages Young employeesrsquo employment
this shortfall many young employees express an interest in patterns are different to those of previous generations
financial education and advice Fully 26 say that lsquobetter and The survey revealed that 39 are planning to look for a new
more frequent information about my retirement savingsrsquo would job in the next 12 months compared to 29 of all employees
encourage them to save more for retirement 23 cite lsquoaccess and 31 of young employees are thinking about quitting their
to a professional advisor with personal recommendationsrsquo and jobs At the same time young employees place a high value
22 want lsquofinancial education so I am more aware of what I on occupational benefits with 87 believing a workplace
need to do for myselfrsquo retirement plan with employer contributions would be an
important factor when choosing their next job
Tellingly almost a quarter of young employees (24) cite
friends and family as the most important source of information These dual needs of workplace retirement plans and high levels
in choosing how to save for retirement which suggests that of labor mobility can be resolved with a more flexible range of
employers and professional financial services companies are employer benefits A third (33) of young employees would
either not providing appropriate support or are not providing be encouraged to save for retirement by matched retirement
support in a manner that is perceived to add value to these contributions from their employer Again clarity and insight are
employees Given the severe long-term repercussions themes with 24 stating that access to simpler investment
of poor retirement readiness it is essential that employers products would increase their propensity to save Finally there
and retirement companies make haste in filling this gap is a leading role for government to play through the creation of
stable long-term financial and taxation policy Among young
employees 34 stated that more generous tax breaks on
long-term savings and retirement plans would encourage
them to save
The Young Pragmatic and Penniless Generation | 4
Introduction Todayrsquos twentysomethings are young but hardly carefree At a time in life when previous generations built a career and laid the foundations for a secure future many of todayrsquos young workers face unprecedented financial challenges Student debt uncertain employment prospects high housing costs the potential support of elderly parents and receding government retirement benefits are just a few of the economic and financial uncertainties that undermine their ability to plan and save for their retirement At a time in life when savings have the longest time horizon for growth these challenges work against young workersrsquo future retirement readiness
5 | The Young Pragmatic and Penniless Generation
The structure and methodology of this report specialized public policy interventions Thus the research reflects
The Young Pragmatic and Penniless Generation polled employees views of the mainstream working population
and retirees in 12 countries Canada China France Germany
Hungary Japan the Netherlands Poland Spain Sweden the A guide to this report United Kingdom and the United States These countries were The reportrsquos conclusions and recommendations flow from an
selected on the basis of having distinctive retirement systems examination of todayrsquos young employees in the context of older
as well as varying demographic and aging trends i and retired employees
bull Par t 1 of this report explores the financial pressures that Respondents were interviewed using an online panel survey young people face from unemployment intermittent
in their native language ii in January and February of 2013 employment and extended full-time education
The sample comprised 10800 employees including 2722 people bull Par t 2 reviews the savings outlook including young employeesrsquo between the ages of 20 and 29 and 1200 retirees The 12 attitudes toward saving expectations for retirement income
countries surveyed represent employees who cumulatively have and retirement age and perceived responsibilities toward
access to around 85 of the worldrsquos private retirement assets iii parent care
(excluding government retirement benefits) bull Par t 3 examines some of the potential savings obstacles such as household economics and the income position of
Issues covered included attitudes toward retirement the individual employee and the importance of advice and
preparedness the role of government and employers in the education in altering youth perceptions of financial priorities
provision of retirement benefits and the impact of the financial bull Par t 4 explores how to encourage young people to save and crisis on attitudes to investment risk and retirement planning the role of employers in this
The survey did not include the self-employed unemployed
or long-term incapacitated since each of these groups faces The final part sets out recommendations for improving the
specific retirement planning challenges which may require retirement readiness of this important group within society
The Young Pragmatic and Penniless Generation | 6
Part 1 Young people at risk in an uncertain world As societies enjoy the benefits of longer life expectancy people will need to work harder to secure a comfortable retirement This will mean saving more during working life and a redefinition of how to approach retirement When it comes to achieving this important life goal however some groups are more at risk This report examines one such group in detail young employees at the beginning of their working life
7 | The Young Pragmatic and Penniless Generation
Countr y Median Income
lsquo(nearest 000) Married Undergrad degree or more Dependent children (any)
All 20-29 year olds $27500 25 53 25
Netherlands $37000 17 39 20
Germany $38000 33 18 27
Sweden $39000 16 30 32
United Kingdom $48000 24 53 24
France $28000 23 66 26
Spain $23000 13 54 25
Poland $13000 38 57 28
Hungary $6000 31 34 16
United States $43000 26 58 27
Canada $51000 36 55 27
China $18000 31 89 30
Japan $37000 12 63 11
Who are younger employees are also more likely than average to be single and much less
This report defines younger employees as people between likely to have children A quarter are married compared to an
20 and 29 years of age a group that belongs to the Millennials average of 64 for the generation now in their 50s
generation born between 1980 and 2000 This group differs
widely among countries although there are clear trends Education levels vary across the countries included in this research
Many have been in the labor market just a few years after a long due to differences in higher education systems (Chart 1) Overall
period of higher education Unsurprisingly median household those aged 20-29 were more likely than the average respondent
incomes are lower around $27500 according to this research to have at least an undergraduate degree The increasing
compared to an overall median of $46000 Twentysomethings prevalence of education has both positive and negative impacts
Chart 1 A portrait of younger employees Q Which of the following reflects your annual household income before taxes
Q What is your marital status
Q Please choose from the following list the highest level of educational or professional qualification you have
Q How many children do you have who are financially dependent on you Please include all children and stepchildren
Why are young people at risk Such changes will not be achieved easily in the current climate
Todayrsquos young people face a challenging set of circumstances The global financial crisis of 2007-8 not only created a need
An aging society means fewer employees supporting more for long-term structural retirement reforms it also led to the
retirees which is profoundly affecting how societies fund more immediate menace of historically high levels of youth
retirement In most of the countries surveyed lsquotraditionalrsquo unemployment The International Labour Organization (ILO)
retirement provision such as government retirement benefits estimated that in 2013 unemployment affected 73 million young
and other forms of social security or employer-sponsored people aged 15-24 worldwide representing more than 126
retirement arrangements like defined benefit company of all young people iv Across the EU 228 of people under 25
retirement plans are already subject to long-term reforms were unemployed in 2012 and in Spain the figure was 53 v
These reforms will reduce the value of future entitlements It is worth noting that the study is conducted among those who
by lowering retirement income benefits and raising the age are currently employed (part- or full-time) so the findings do not
of retirement and are likely to begin to take full effect from fully take into account the significant number of unemployed
the middle of this century just as the current generation young people
of twentysomethings enters retirement Consequently the
retirement prosperity enjoyed by todayrsquos Baby Boomers will not
be shared by subsequent retiring generations unless there is a
major change in their savings behavior
The Young Pragmatic and Penniless Generation | 8
13
4
16
3
Chart 2 Youth unemployment in 2005 and 2012 across Aegon survey countries (excluding China)
60 1
24
14
3
2005 2
06
2012
23
8
45
15
2
81
19
4
30 2
81
86
79
15 9
4
95
37
8
0 2
65
y
Japan
Spain
19
7
Canad
a
Fran
ce
Poland
Germ
any
Hunga
r
Sweden
OECD tota
l
Nether
lands
53
2
United S
tate
s
United K
ingdom
22
Note Youth unemployment rate of youth labour force (age 15 - 24) vi
23
7
12
2
21
11
3
16
2
The problems of high levels of youth unemployment and economic uncertainty affect those with jobs as well as those without
as they breed lower levels of job security and downward pressure on wages They also have a significant impact on the psychology and
confidence of younger people including those in work and their confidence in their short-term and retirement finances As the survey
findings reveal most young employees expect to find themselves worse off than their parentsrsquo generation when they enter retirement
(Chart 3)
Chart 3 The majority of young employees believe that they will be worse off in retirement compared to their parents Q Do you think that future generations of retirees will be better off or worse off than those currently in retirement
Base 20-29 year olds
Donrsquot knowBetter off
8 13
Total Respondents
2722
20 About
the same
59
Worse off
9 | The Young Pragmatic and Penniless Generation
Another major influence on the ability of young employees to save for retirement is the growth of higher education One positive
is that college graduates are more likely to benefit from lower unemployment rates fare better during economic downturns and
experience higher incomes across their lifetime supporting aspirations like home ownership vii and helping to sustain long-term
savings and increased levels of retirement preparedness (Chart 4)
Chart 4 Graduates are likely to enjoy a greater sense of retirement preparedness Q Thinking about how much you are putting aside to fund your retirement are you saving enough
Base All lsquovery prepared for retirementrsquo
30 27
17 16Postgraduate degree or qualification
College degree University degree Some college or trade school
8 High school graduate
1 Below high school graduate Other
Conversely full-time education delays entry into the labor Why is this group of young employees important arket causing a loss of several years of full-time earnings By the middle of the century todayrsquos 20-29 year olds will
otential Moreover ballooning levels of student debt may have led the world economy through an economic recovery
ignificantly delay the onset of post-graduation saving and dramatic demographic shifts during a period of greater
etween 2004 and 2012 for example student debt in the uncertainty for modern retirement systems and other issues
nited States tripled to $966 billion nationwide The effect In developing countries such as China this group will be more
f this is that todayrsquos younger employees must take greater affluent than their parents but still need to deal with the
ersonal responsibility for their savings a challenge in the consequences of a rapidly aging population and an economy
urrent economic and financial circumstances which has passed its phase of rapid growth
For all of their challenges however this group of young people
represents the biggest opportunity to change societal savings
behaviors for the better The Aegon Retirement Readiness Survey
2013 provides insights into how best to achieve this through a
greater understanding of the grouprsquos outlooks and savings habits
m
p
s
B
U
o
p
c
The Young Pragmatic and Penniless Generation | 10
45
29
20
6
50
24
21
6
56
19
21
4
46
27
21
6
Better off About the same
Worse off Donrsquot know
All work
ers
20-29 ye
ar old
s
Male 2
0-29 ye
ar old
s
Fem
ale 2
0-29 ye
ar old
s
Chinarsquos young employees bucking the gloomy trend optimistic that their economy will continue to expand over
A key finding of this yearrsquos Aegon Retirement Readiness the next 30 years Concerns about the sustainability of
Survey is that Chinese employees are far more confident growth remain however Just 37 of Chinese 20-29 year
and optimistic about their financial future than employees olds believe that the Chinese economy will improve over
in other countries This is also true of younger employees the next 12 months ndash indeed 2013 will see the economyrsquos
Of those Chinese aged 20-29 half (50) believe that they slowest expansion since 1990 x Long term Chinarsquos rapidly
will be better off in retirement than those currently in aging population makes creating a comprehensive and
retirement Younger Chinese men are the most optimistic sound retirement system an urgent priority xi Coverage has
with 56 believing that they will be better off expanded in the past 10 years with reforms such as the
introduction of the Enterprise Annuity in 2005 yet it is still
This optimism is relatively justified Since 1980 Chinese GDP not clear how China will build a universal retirement system
per capita has increased thirty-fold from $193 to $6091 across both the government-sponsored and private sectors
in 2012 viii While this dramatic increase has not benefitted However the success of reforms carried out to date suggests
all Chinese equally ndash by the Chinese governmentrsquos measure that tax incentives and efforts to improve awareness are
99 million rural Chinese live in poverty ix ndash huge progress required as part of any long term solution
has been made and young people in China are generally
Chart 5 Chinarsquos younger employees are confident of a better retirement Q Do you think that future generations of retirees will be better off or worse off than those currently in retirement
Base Respondents in China
11 | The Young Pragmatic and Penniless Generation
Part 2 The savings outlook of young employees This chapter explores the financial behaviors and savings gaps and needs of 20-29 year olds through their attitudes toward financial issues the wider economy and the savings required for a comfortable retirement
The Young Pragmatic and Penniless Generation | 12
75
21
4
69
27
4
64
31
4 5
7
36
7
20-29
30-39
40-49
50-59
44
40
16
NET Low Index (0-5)
NET Medium Index (6-7)
NET High Index (8-10)
60-69
Retirement readiness and young employees However many young employees have concerns about achieving
Retirement is seen as a major life stage by young employees this Over a third (38) are pessimistic that they will not have
They typically expect to spend an average 20 years of their lives enough to live on in retirement and 44 are pessimistic about
in retirement a definition of retirement that is consistent across being able to choose when they retire Furthermore 28 have
all working age groups Retirement conjures broadly positive made no plans at all for their retirement which may help explain
associations Fully 63 of employees in their twenties aspire some of these concerns Health worries are less of an issue with
to travel during retirement 39 see it as a period of leisure 52 being optimistic that they will enjoy good health in old age
and 30 associate it with freedom The need to plan and save although 20 believe that they will not which is perhaps related
for this phase of life is also widely accepted Half (50) of to the 17 who associate retirement with ill health in general
employees in their twenties are aware of the need to save and
64 feel a high or very high degree of personal responsibility Overall 75 of employees in their twenties achieved a low
to ensure sufficient income for retirement retirement readiness score of 0-5 on the Aegon Retirement
Readiness Index (please refer to the glossary and Appendix 1 for
an explanation of the Index) The percentage of employees with a
low score of 0-5 drops with each increase in age group and is 44
among those in the lsquoat retirementrsquo group of 60 to 69 year olds
Chart 6 Aegon Retirement Readiness Index scores for employees across age groups For more information on the ARRI see page 36
Base All aged 20 - 69
Life stage and savings attitudes Getting married and starting a family are two such events
he Retirement Readiness Index reveals that retirement Of employees in their twenties 25 are married and
reparedness is to some extent age- and life stage-related 25 have children whereas for those in their 30s 54 are
hart 6) For younger employees the idea that retirement is married and 56 have children representing a major shift
r awayrsquo combined with lower earnings and other spending toward parenthood
riorities (such as higher education or purchasing a house)
an be powerful obstacles to saving for retirement Thus while Encouragingly while young employees are less likely to
5 of all employees say that they lsquoalways make surersquo that they have started saving for retirement many see themselves as
re saving for retirement just 25 of 20-29 year olds do so future lsquoaspiringrsquo savers Fully 41 intend to save in the future
t present over half (57) of 20-29 year olds are not saving compared to 27 of all employees and only 7 do not intend
r retirement compared to 46 of all employed adults to save for retirement This large group of aspiring savers
ven in China where 44 are always saving for retirement who are committed to the idea of putting money aside for
st 32 of 20-29 year olds do so retirement challenges the view that young people are unwilling
to save Furthermore since converting these young employees
his life cycle effect can be seen in numerous ways At the from aspiring savers to regular savers may depend on the
utset of adult life employees experience lower income and right economic conditions and appropriate financial incentives
igher spending as they prioritize and fund life events with a helping them is a major opportunity for governments and
ignificant impact on their ability or desire to save for retirement employers
T
p
(C
lsquofa
p
c
3
a
A
fo
E
ju
T
o
h
s
13 | The Young Pragmatic and Penniless Generation
35 25 20 19 12 9 27 41 7 7
I always make sure I only save for I am not saving for I am not saving for I have never saved that I am saving retirement occasionally retirement now although retirement though for retirement and for retirement from time to time I have in the past I do intend to donrsquot intend to
All 20 to 29 year olds
NET Low Index (0-5)
NET Medium Index (6-7)
NET High Index (8-10)
Chart 7 Younger employees are much more likely to aspire to save for retirement but the majority are not saving Q Which of the following best explains your approach to saving for retirement This can include money you contribute to any
long-term investment including pensions stocks and shares investment-linked insurances property etc
Other findings support the assertion that younger savers This can be seen in Chart 8 More 20-29 year olds claim that
are open to increasing their retirement savings Over a third they are not likely to be saving for retirement by any means
(37) of 20-29 year olds feel lsquovery responsiblersquo for ensuring (17 against 12 for all adults) and are generally less likely
a sufficient retirement income Note however that this does to use any of the savings products mentioned Revealingly
not translate into better developed financial plans and savings 20-29 year olds are far less likely to name lsquogovernment benefits
strategies Only 7 in this age group feel they have lsquowell in retirementrsquo as a source of retirement income although almost
developedrsquo personal retirement plans and 33 say they are all respondents have some such entitlement This may be due
lsquohardly saving anythingrsquo for retirement Clearly awareness of the to unawareness of government benefits and or greater
retirement situation does not translate into actual retirement scepticism about governmentsrsquo ability or willingness to
planning activity provide for them in old age
The Young Pragmatic and Penniless Generation | 14
Chart 8 Younger people are more likely not to be using any means of retirement savings Q Which financial means if any are you currently using to prepare for your retirement
33 Savings accounts 31
36 Government pension social security 24
25 Defined benefit plan 21
22 Private pension 17
23 Defined contribution plan 15
20 Life insurance 15
14 Stocks 10
14 My home 9
12 Mutual funds 8
9 Inheritance 7
9 Bonds 7
8 Investment property 7
5 Employee stock purchase 5
5 Investment insurances (annuities) 4
4 Long-term care insurance 4
6 Annuities 3
My business 2 3
Reverse mortgage 1 1
Other 3 2
12 None nothing 17
6 Donrsquot know 10
All 20 to 29 year olds
Leisure
Freedom
Far away
Insecurity
Enjoyment
Poverty
Ill health
Boredom
Opportunity
Dependent on others
Loneliness
Tired
Excitement
None of the above
Donrsquot know
Retirement associations What does the younger generation feel about retirement and want to get out of it Perhaps unsurprisingly 20-29 year olds are more
likely to be negative than older respondents associating retirement with boredom loneliness and ill health They are also far more
likely to believe retirement is lsquofar awayrsquo which is likely to be a barrier to retirement saving
15 | The Young Pragmatic and Penniless Generation
Chart 9 The younger generation has more negative associations with retirement Q Which if any of the following words do you most associate with retirement
44 Leisure 39
36 Freedom 30
17 Far away 26
25 Insecurity 25
25 Enjoyment 21
19 Poverty 19
15 Ill health 17
9 Boredom
13
16 Opportunity
13
10 Dependent on others
12
9 Loneliness
11
0
r olds
7Tired
1
6Excitement
6
2None of the above
1
2Donrsquot know 2
All 20 to 29 yea
Aspirations and responsibilities for retirement Income levels in retirement ung people have similar retirement aspirations to the general A high proportion (47) do not know if they are on course
pulation for example travel (63) spending time with to achieve their retirement income goal Combined with the
iends and family (61) and pursuing new hobbies (52) high level of financial responsibility young employees expect
r them however retirement also includes the responsibility of to assume in retirement it is clear that people not only need
ring for others Two-fifths (40) believe that lsquoadult children to build much greater awareness of what kind of financial
retirees should help through providing financial support to pressures they are likely to face in retirement but also require
eir parents if neededrsquo and 28 believe that this will affect greater support in establishing realistic retirement income
em directly in retirement through providing financial support targets which are capable of meeting their needs
their parents A fifth (21) also expect to spend some of
eir retirement caring for other family members while just
donrsquot expect to provide for anyone compared to 40 of all
ployees Clearly todayrsquos young employees anticipate serious
ancial responsibilities in their retirement
Yo
po
fr
Fo
ca
of
th
th
to
th
30
em
fin
The Young Pragmatic and Penniless Generation | 16
Chart 10 Many young employees do not think that they are on course to achieve target retirement income Q Do you think you will achieve this income [your estimated income needed in retirement]
Base 20-29 year olds
Yes I am on course to achieve my retirement
income
16
47
12
16
10
I donrsquot know if I am on course to achieve my
retirement income
No I am on course to achieve around
one-quarter (25) of
No I am on course to achieve around half of my
retirement income
No I am on course to achieve around
three-quarters (75) of my retirement income
532
China
586
Japan
United S
tate
s
628
Poland
635
Canad
a
636
Hunga
r
638
y
Fran
ce
645 647
Spain
Sweden
649
United K
ingdom
651
Germ
any
653
Nether
lands
666
my retirement income
When will young people retire Media reports about the need to raise the age of retirement appear to have influenced younger employees Fully 44 of 20-29 year
olds do not expect to be able to choose their retirement date although the younger generation do expect to retire at a similar age
to older employees 63 This varies considerable by country In the Netherlands young employees expect to retire eight years later
than those in Japan Some countries such as China and Japan have surprisingly low expected retirement ages suggesting that young
employees may benefit from having a better understanding of when government or workplace retirement benefits kick in
Chart 11 Young people in most countries expect to retire before 65 Q At what age do you expect to retire from all paid employment
Base 20-29 year olds
Despite expecting to retire at the same age as their parents younger employees are more open to a transition into retirement
reflecting their more flexible outlook toward work Around half (51) are happy to change the way they work in some way as they move
into retirement Just 8 expect to keep working as they do currently
17 | The Young Pragmatic and Penniless Generation
Part 3 What is holding young employees back Insights into what young employees feel is holding them back from saving or saving more can be used to encourage younger people to adopt more positive savings behaviors This chapter explores the attitudes of young employees toward the financial obstacles they face and asks what actions they have taken in preparation for retirement The findings reveal that while the majority lacks adequate planning for their retirement needs financial shortcomings are only part of the stor y Spending preferences play a key role in the savings gap of advanced economies
The Young Pragmatic and Penniless Generation | 18
Lack of money to invest 37
16 The uncertain economic environment
7 Fear of poor investment returns over the coming years
6 I donrsquot trust the financial services industry
6 I donrsquot know how to go about investing for the long-term
4 oncerns about unstable currencies currency fluctuations
4 Complexity of investment products
4 I canrsquot afford to take financial advice
3 The fees charged by financial services companies
3 I donrsquot see the need to save for the long-term
Other 2
Donrsquot know 8
A pay rise
More generous tax breaks on long-term savings and pensions products
A better retirement plan pension match from my employer
Better and more frequent information about my retirement savings
Simpler investment products that I can understand with less jargon
Access to professional financial advice so that I have personalized recommendations on what steps I need to take
Access to financial education so that I am more aware of what I need to do for myself
Better legal protection in case I am sold the wrong product
Other
Not applicable - I already have sufficient savings
Donrsquot know
Obstacles and incentives to saving
Chart 12 Younger employees feel they donrsquot have money to invest for retirement Q What is the single biggest obstacle to you saving for retirement right now
Base 20-29 year olds
C
What is the single biggest obstacle preventing twentysomethings that they rank pressing and desirable life goals such as marriage
m saving for retirement Not having enough money to invest starting a family vacations and other leisure activities above the
top of the list cited by over a third (37) although this figure need to plan for retirement This suggests the savings gap is
ops to just 6 in the emerging market of China where mean preference-driven
omes are the lowest by far ($18000) suggesting that lack of
sh may be partly a state of mind Young employees in China The biggest obstacle to retirement savings cited by one-eighth
actually more worried about local concerns such as economic (13) of respondents is either not knowing how to invest for the
certainty (29) and currency instability (15) Behavioral long-term or the complexity of investment products charges and
ance has an impact too with the way young employees frame fees Ready solutions to this include improving young employeesrsquo
eir financial priorities creating its own obstacles to saving financial literacy about retirement planning and creating easier
many as 57 of 20-29 year olds believe that saving for access to professional financial advice
tirement is important but not a current priority suggesting
fro
is
dr
inc
ca
are
un
fin
th
As
re
19 | The Young Pragmatic and Penniless Generation
Chart 13 More money would incentivize young employees to save for retirement Q Which if any of the following would encourage you to save for retirement
Base 20-29 year olds
57 A pay rise
More generous tax breaks on long-term savings and pensions products
34
A better retirement plan pension match from my employer
33
Better and more frequent information about my retirement savings 26
Simpler investment products that I can understand with less jargon 24
Access to professional financial advice so that I have personalized recommendations on what steps I need to take 23
Access to financial education so that I am more aware of what I need to do for myself 22
Better legal protection in case I am sold the wrong product 16
Other 2
Not applicable - I already have sufficient savings 2
Donrsquot know 10
Chart 14 Very few younger employees have a written plan for retirement Q Which of the following best describes your retirement planning strategy
Base 20-29 year olds
5 Donrsquot know I have a
written plan
8
34 I have a plan but it is not
52 written down
I do not have a plan
Turning to incentives greater remuneration predictably tops a list Retirement planning of what would encourage 20-29 year olds to save for retirement Retirement planning is essential to adequate retirement saving
More tellingly a third (33) would like their employer to provide although it is somewhat lacking in todayrsquos younger employees
a better retirement plan into which both parties contribute Over half (52) have no retirement planning strategy at all
Better information and simple products would also help more and only 8 have noted down their retirement strategy
people to save A quarter (26) would be encouraged to save by
better and more frequent information about retirement savings Nevertheless the respondents polled believe that the current
while a similar number (24) want simple investment products global economy makes retirement planning increasingly
that are easy to understand As with the previous question a important ndash 71 agreed with this statement It is clear from this
lack of investment knowledge and the complexity of investment that young people between the ages of 20 and 29 do not lack
products are revealed as obstacles to savings the will to save they lack the opportunity
The Young Pragmatic and Penniless Generation | 20
Part 4 Creating the right conditions for young employees to save How may young employeesrsquo obstacles to saving be overcome For retirement readiness this will be a defining question of the early twenty-first centur y ndash and an extremely challenging one given the number of serious issues affecting younger employeesrsquo finances What was learned in the previous chapter about encouraging young employees to save is a start This chapter examines which areas and triggers to saving can be unlocked and whether government employer or individual should take most responsibility
21 | The Young Pragmatic and Penniless Generation
Friends and family
Professional financial adviser
17
24
Bank adviser 9
Personal finance websites online retirement planning tools
My employer
Government website
4
8
7
Insurance agent spokesperson
Accountant
3
3
Personal finance media 3
Lawyer
Bank website
3
2
Insurance company website
Donrsquot know
2
15
Information and advice on retirement saving strong theme revealed by our findings is that younger This finding is remarkably consistent across the countries
mployees want more information on savings products and sur veyed despite significant differences in market makeup
etter access to advice The largest share 24 (compared although some differences exist For instance a quar ter
o 17 for all employees) finds friends and family to be the (25) of young employees in France turn to bank advisers
ost important source of advice followed by professional for financial information nearly triple the number among all
dvisers (17) and bank advisers (9) That young employees young people (9)
urn to friends and family first suggests an unmet need for
rofessional financial advice This is both a challenge and an
pportunity for the financial ser vices sector
hart 15 For young employees friends and family are the leading source of retirement savings information Which of these sources (of information) is most important to you
ase 20-29 year olds
A
e
b
t
m
a
t
p
o
CQ
B
What is the role of the workplace in retirement planning Does this influence what retirement benefits younger
In response to shifting employment patterns todayrsquos younger employees expect from their workplace Certainly a majority
employees are less loyal to their employers than older workers favor workplace retirement plans with 61 believing that these
Fully 39 of 20-29 year olds are planning to look for a new job should be a fundamental part of pay (although this is lower
in the next 12 months compared to 29 of all workers and than for employees overall) and just 4 feel that retirement
31 frequently think about quitting their jobs Strikingly while planning should be left entirely to individuals
53 of all workers plan to stay with their current employer
until retirement just 37 of 20-29 year olds say this However there is evidence of a slight shift in perceptions
Younger workers are less likely to want workplace retirement
Doubtless much of this is because younger workers are more plans over other factors Of those who want employer
mobile and have more opportunities Another trigger to lower retirement plan contributions only 46 wanted this even if
employer loyalty may be the expectation of holding more jobs it reduced benefits and 35 (compared to 43 of all workers)
and even pursuing multiple careers over a working lifetime if it cut jobs
The Young Pragmatic and Penniless Generation | 22
Donrsquot know Employers should be
required to contribute to workersrsquo pensions
5 Nothing ndash it should be left to the government to take 18
care of its citizens 28
4 Nothing ndash it should be left to individual employees to
take care of themselves
13
22
Employers should provide a range of flexible benefits
and allow individuals to choose which benefits they
actually want
10 Employers should
be required to make a pension available but not
to contribute into it
Employers should not be required to provide pensions but should
provide information on how to plan for retirement
Chart 16 Most young workers feel that their employer should provide some kind of pension Q In the future what if anything should employers do to help people plan for retirement
Base 20-29 year olds
Are other workplace benefits more important Younger workers were asked to rate the importance of various workplace benefits The results reveal how highly they value the
elements of their compensation package Chart 17 shows that 87 of young employees believe a workplace retirement plan with
employer contributions would be an important factor when choosing their next job While retirement may be decades away for
twentysomethings 80 believe programs provide for a phased retirement are important
23 | The Young Pragmatic and Penniless Generation
Basic salary 94
93 Holiday entitlement
91 Overtime and bonus pay
91 Location of workplace
88 Medical health insurance
87 Opportunities for career progression
Access to a workplace retirement plan with employer contributions 87
Access to good training provision 86
Flexible working hours 85
Life insurance (death in service benefits) 81
Phased retirement or other employer programs providing for a transition into retirement 80
Ability to work past the normal retirement age 70
Access to a workplace retirement plan without employer contributions
67
Employee stock plans 65
Access to creche help with the cost of childcare 59
Opportunities for foreign travel 50
Company car 43
Chart 17 Workplace retirement plans are a relatively low priority for younger workers when choosing a job How important to you would the following workplace benefits be if you were choosing your next job
ase 20-29 year olds
Q
B
Regarding workplace benefits provided by employers today considered just enough to fulfill basic needs and in China a
young employees are about as likely as all workers to be offered fully formed nationwide retirement system is still some way off
retirement tools such as annual plan statements and online The future shape and affordability of these plans is debated in
tools from their employer though it is concerning that 24 do all of the sur vey countries to var ying degrees
not know if such tools are available or not Those provided are
considered helpful Younger workersrsquo views on reform are important because
changes to government retirement benefits are more likely
The role of government to affect them than any other part of the working population
The generosity of government retirement benefits varies The main concern cited by 57 is of facing less generous
considerably in the countries sur veyed In some countries such government retirement benefits than those enjoyed by their
as France government benefits are the primar y mechanism parentsrsquo generation
for funding retirement while in the United Kingdom they are
The Young Pragmatic and Penniless Generation | 24
The government should reduce the overall cost of state pension provision by
reducing the value of Donrsquot know individual pension plans
25 22
4 The government should not do anything State pension provision will
remain perfectly affordable in the future
28
21 The government should increase overall funding
available for the state pension through
raising taxes
The government should take a balanced approach with some reductions in individual payments and
some increases in tax
Chart 18 Young workers think that the government retirement system will need to be reformed Q With the cost of government retirement benefits becoming a greater concern as people live longer which
if any of the following do you think the government should undertake
Base 20-29 year olds
The younger generation believes that the government cannot What do young employees look for in a retirement product continue to provide as it does now ndash just 4 think government The sur vey findings show that young employees have
benefits will remain affordable to society However there is no reser vations about employer and government retirement
consensus on what governments should do to reform retirement benefits So what then do they want from a private savings
plan systems Over a fifth (22) think retirement entitlements product The savings product feature most valued by younger
should be cut just over a fifth (21) think governments should workers is protection against investment risk (Char t 19)
raise taxes and more than a quarter (28) think a mixture of This may be in the form of no loss of initial investment a
the two is the best solution Another quarter admits that they guaranteed income stream or protection against inflation
donrsquot know what should be done This is reasonable ndash the initial investment of those farthest
from retirement is most at risk However less consideration
is given to savings grow th through investment returns This
suggests that there is an oppor tunity to educate young
workers about the trade-off between returns and risk
management and what they stand to gain
25 | The Young Pragmatic and Penniless Generation
Chart 19 Products which protect against investment risk are the most important to young workers ( interested) Q Thinking about the types of financial products you could purchase to help provide you with security in retirement on a scale of 1 to 5
how interested are you in the following options
Base 20-29 year olds
A product providing a guaranteed retirement income stream or lifetime income in retirement 82
A product which protects my retirement income against inflation 81
A product which guarantees that I donrsquot lose my initial investment 81
A product which helps meet the cost of long-term care if I become unable to look after myself 80
A product which protects my capital from poor investment returns 79
A product which generates a retirement income and allows me to take a lump sum from the investment should I need to 79
A product where the annual management charges are kept low 78
A product which enables me to keep some control over how my savings are invested during my retirement 77
A product which manages the asset allocation so that I am never exposed to a level of risk Irsquom not comfortable with 76
A product which continues to provide a retirement income to my spouse in the event that I die first 75
A product which protects my family against having to pay estate taxes when I die 72
A product which locks in investment returns during the good years 70
The lsquodefined ambitionrsquo retirement system in This removes some of the disadvantages of leaving
the Netherlands a sustainable retirement solution retirement liabilities exclusively up to employers
for young workers (defined benefit) or employees (defined contribution)
In the Netherlands as elsewhere young workers are faced In the Netherlands this is likely to involve legislation which
with an increasing retirement age decreasing government lets retirement funds automatically adjust pay-outs and
suppor t for retirement and declining traditional defined retirement age as life expectancy changes xii
benefit employer retirement plans Reforms proposed
by the Dutch may show a way for ward for all mature and This model has garnered interest elsewhere In the
aging economies United Kingdom Pensions Minister Steve Webb expressed
interest on a more limited scale with a government
rsquoDefined ambitionrsquo proposes that risks are not taken on fully guarantee for a minimum rate of return for defined
by either employer or employee but are shared contribution retirement plans
The Young Pragmatic and Penniless Generation | 26
Recommendations Enabling young workers to save The studyrsquos findings reveal that the majority of young workers (66) are either saving consistently or aspire to start saving but face challenges including debt low pay and funding for significant life events and generational changes to the economic landscape and government and employer support If young people are to achieve a prosperous retirement their willingness to save should be met with better opportunities to save Here is what can be done by employers governments and young people themselves to address retirement planning concerns for younger adults
27 | The Young Pragmatic and Penniless Generation
Individuals Employers and governments
Determine how much income you need in retirement Auto-enroll employees into a workplace retirement plan Young people accept the need to save for retirement but donrsquot If an auto-enrollment workplace retirement plan is feasible
know how to act on that need They can become more retirement this can play a major role in getting young workers saving early
savvy simply by talking to friends and family (as do 24 of and regularly Combined with auto-escalation (the automatic
our respondents already) or employers going online to use annual increase in retirement plan contributions) and matching
retirement calculators or reading the personal finance media contributions it can lead to greater retirement readiness
Seek out a financial advisor Provide more flexible savings products through the workplace Young people are faced with life events that make it easy to Not all savings journeys start with a retirement plan particularly
feel overwhelmed by financial priorities in addition to retirement for young people who may think of retirement as lsquotoo far awayrsquo
planning Soliciting advice from a finance professional early in Employers can kick-start the savings habit in younger workers
life (17 of young employees have done so already) helps with by providing flexible easy to access and easy to understand
planning and priorities and making sense of long-term finances savings plans as a more attractive starter option
Start saving now and save consistently Make company retirement plans more portable As with all employees young people will strengthen their Young people move jobs much more often than previous
retirement readiness simply by saving regularly Today only 25 generations of employees so savings like DC retirement plans
of young people always save yet even small regular amounts need to follow employees when they change jobs
will improve retirement readiness over time
Make tax incentives more effective Ask your employer about workplace retirement savings plans All countries encourage long-term savings through tax relief but
and other retirement benefits young people often arenrsquot aware of this or donrsquot understand it
While one third (33) of young people believe that a workplace A more targeted system of tax relief could help provide clearer
retirement savings plan provides a major opportunity to start and simpler signals to younger people about the financial
saving employers often experience difficulties in engaging benefits of long-term saving
younger employees in discussions about retirement planning
The workplace is an important channel for achieving retirement Make better financial education central to the workplace readiness so be sure to max out on any employer contributions retirement offer
Young people who aspire to save may be prevented from
doing so by setting the wrong financial priorities Workplace
retirement education ndash alongside professional advice ndash can help
guide young people toward the right long-term priorities at an
earlier age in life
The Young Pragmatic and Penniless Generation | 28
29 | The Young Pragmatic and Penniless Generation
Glossary
Aegon Retirement Readiness Index (ARRI) c areer average retirement plan The ARRI assesses the relative levels of retirement A type of defined benefit plan that is based on an
preparedness of employees across different countries on a employeersquos average retirement earnings over the duration
scale from 1 to 10 The Index is based on three questions of plan membership Same as average salary plan
covering attitudes and three questions covering behaviors
defined ambition (DA) plan average salary plan A type of retirement plan in which retirement plan risks
A type of defined benefit plan that is based on an are shared between the employer and the employee
employeersquos average retirement earnings over the duration It offers greater certainty to savers around the final value
of plan membership Same as career average plan of their retirement assets than in DC plans and less
cost volatility for employers than with DB plans In the
a nnuity Netherlands Defined Ambition (DA) retirement plans are
A form of contract sold by life insurance companies that being introduced in order to help relieve the pressure on
guarantees a fixed or variable payment to the annuitant employers while still trying to provide employees with a
at some future time usually retirement All capital in the more secure retirement plan The United Kingdom too is
annuity grows tax-deferred looking at DA retirement plans as a solution
auto enrollment defined benefit (DB) plan An employer-sponsored retirement plan in which the An employer-sponsored retirement plan where the amount
employer is able to enroll an employee without that of future benefits an employee will receive from the plan is
employeersquos express authorization The employer determines defined typically by a formula based on salary history and
what percentage of the employeersquos salary or wages is years of service The amount of contributions the employer
contributed to the plan The employee is able to change is required to make will depend on the investment returns
this percentage and can opt out of enrollment in the plan experienced by the plan and the benefits promised
Contrast defined contribution plan
a uto-escalation A feature of a plan which automatically increases the defined contribution (DC) plan percentage of (retirement) funds saved from salary An employer-sponsored retirement plan such as a 401(k)
This feature generally uses a default or standard plan or a 403(b) plan in the United States in which
contribution escalation rate contributions are made to individual participant accounts
Depending on the type of DC plan contributions may be
B aby Boomers made by the employee the employer or both
A term used to refer to people generally born between
the end of World War II in 1945 and the mid 1960s The employeersquos benefits at retirement or termination of
Other generations Silent Generation - the generation born employment are based on the employee and employer
between 1925 and 1945 Generation X - the generation contributions and earnings and losses on those
born between 1965 and 1979 Millennials or Generation contributions See also 401(k) and 403(b) plan
Y - the generation born between 1980 and 2000 and often Contrast defined benefit plan
classified as the children of Baby Boomers
The Young Pragmatic and Penniless Generation | 30
401(k) plan An employer sponsored retirement plan that enables
employees to make tax-deferred contributions from their
salaries to the plan
403(b) plan An employer-sponsored defined contribution plan that
enables employees of universities public schools and
non-profit organizations to make tax-deferred contributions
from their salaries to the plan
final salary plan A type of defined benefit plan in which retirement
benefits are based on final retirement salary in the years
immediately before retirement benefits are received
Millennials A term used to refer to the people born from about 1980
to 2000 brought up using digital technology They are
often classified as the children of Baby Boomers
r etirement (or pension) plan Provides replacement for salary when a person is no
longer working due to retirement In the case of a defined
benefit retirement plan the employer or union contributes
to the plan which pays a predetermined benefit for the
rest of the employeersquos life based on length of service and
salary Payments may be made either directly or through
an annuity Retirement plan payments are taxable income
to recipients in the year received The employer or union
has fiduciary responsibility to invest the retirement plan
funds in stocks bonds real estate and other assets earn
a satisfactory rate of return and make payments to retired
workers Retirement plan funds holding trillions of dollars
are one of the largest investment forces in the stock
bond and real estate markets If the employer defaults in
the United States retirement plan payments are usually
guaranteed by the Pension Benefit Guaranty Corporation
(PBGC)
variable annuities (VA) An insurance contract in which the insurance company
guarantees a minimum payment at the end of the
accumulation period The payments may vary depending
on the financial performance of the managed portfolio
31 | The Young Pragmatic and Penniless Generation
About Aegon Transamerica Center for Retirement Studiesreg and Cicero Consulting
Aegon Transamerica Center Aegon is an international life insurance pensions and asset reg management company with businesses in over 20 markets for Retirement Studies in the Americas Europe and Asia Aegon companies employ The Transamerica Center for Retirement Studiesreg (TCRS) is
around 24000 people and serve millions of customers a division of the Transamerica Institute a nonprofit private
worldwide foundation TCRS is dedicated to educating the public on
wwwaegoncom emerging trends surrounding retirement security in the
United States TCRSrsquo research emphasizes employer-sponsored
In 2010 Aegon became a founding member of the Global retirement plans issues faced by small to mid-sized companies
Coalition on Aging which seeks to raise awareness of aging and their employees and the implications of legislative and
issues among policymakers and the general public A major aim regulatory changes Transamerica Institute is funded by
of the coalition is to transform the way we think and speak contributions from Transamerica Life Insurance Company and
about aging replacing the familiar rhetoric of lsquoproblemsrsquo with its affiliates and may receive funds from unaffiliated third-
a more positive discussion of lsquopossibilitiesrsquo and lsquoopportunitiesrsquo parties For more information about TCRS please refer to
wwwglobalcoalitiononagingcom wwwtransamericacenterorg
Cicero Consulting A leading consultancy firm serving the banking insurance and
asset management sector Cicero specializes in public policy
and communications consulting as well as global thought
leadership and independent market research Cicero was
established in 2001 and now operates from offices in London
Brussels Washington and Singapore As a market leader in
pensions and retirement research Cicero designed
and analyzed the research and contributed to the report
wwwcicero-groupcom
The Young Pragmatic and Penniless Generation | 32
Marta acebo Mark Green Patricia Plas
Paula alvarez douGlas henck scott roane
Frits bart wendel hoFMan thurstan robinson
Grace basile
lynette belFry
andrew berwick
Frans van der horst
tatsuo kai
herMan kaPPelle
Patti rowey
sarah russell
Joost van schaGen
robin boon Gaacutebor kePecs dick schiethart
bert-JaaP brons Marco keiM erik schouten
douG brooks
libby buet
kent callahan
JaiMe kirkPatrick
bas knol
roGer koch
anGela seyMour Jackson
kate sMith
renske stoker
Jeanne de cervens
dana chen
Peter kunkel
alexander kuiPers
eyleen sun
MartiJn tans
arkadiusz chMurzynski
heidi cho
brian lewis
Mike linder
GreG tucker
Mark twiGG
siMon clow siMon luke catherine wanG
robert colliGnon Jason Ma Marc van weede
catherine collinson GrzeGorz Mathea tiM willaert
wendy daniels
Michel denizot
edit drevenka
Paul Middleton
takaoh MiyaGawa
david Moulton
daniel wriGht
alex wynaendts
MacieJ zaPala
Jan driessen
kelly Fu
adrian Grace
Mark Mullin
Marcelle noltenius
stiG nybo
Peacuteter zatykoacute
vicky zeldin
Disclaimer This repor t contains general information only and does
not constitute a solicitation or offer No rights can be
derived from this repor t Aegon its par tners and any of
their affiliates or employees do not guarantee warrant
or represent the accuracy or completeness of the
information contained in the repor t
Acknowledgements
33 | The Young Pragmatic and Penniless Generation
References and notes i For a comparison of different retirement systems see lsquoPensions at a Glance 2011rsquo OECD 2011 ii As the survey was carried out online the survey results in China are based toward people living in urban areas iii ldquoPensions Marketsrdquo TheCityUK March 2013 p9 iv Global Employment Trends for Youth 2013 A generation at risk International Labour Organisation 2013 p2 v Eurostat July 2013 vi OECD Employment and Labour Markets Key Tables from OECD No 2 2012 vii The Federal Reserve Bank of New York 2012 Quarterly Report on Household Debt March 29 2013 viii World Bank ix lsquoWorld-class povertyrsquo The Economist February 27 2013
httpwwweconomistcomblogsanalects201302chinas-poor x lsquoThe Chinese slow down in char tsrsquo The Economist July 15 2013 xi lsquoChina rsquos welfare system difficult inflexible and blatantly unfairrsquo The Guardian April 23 2013
httpwwwtheguardiancomglobal-development2013apr23china-welfare-system-inflexible-unfair xii lsquo The Dutch experience with Defined Ambition pensions and the impact on companiesrsquo Aegon Global Pensions March 12 2013
httpwwwaegonglobalpensionscomenHomePublicationsNews-archiveNewsThe-Dutch-experience-with-Defined
Ambition-pensions-and-what-that-may-mean-for-companies-in-the-Netherlands-and-the-UK
shy
The Young Pragmatic and Penniless Generation | 34
Contact information HE ADQUARTER S
Aegon NV
PO Box 85
2501 CB The Hague
Telephone +31 70 344 32 10
w w waegoncom
MEDIA REL ATIONS
Telephone +31 70 344 89 56
Email gcc-iraegoncom
Countr y Index score
Germany 548
China 541
Canada 524
United States 519
The Netherlands 488
United Kingdom 486
Sweden 483
France 475
Hungar y 473
Poland 463
Spain 440
Japan 430
Total 489
Appendix 1 Aegon Retirement Readiness Index (ARRI) - technical note
Aegon Retirement Readiness Index (ARRI)-technical note 2013 Weightings (2012 in brackets) A sample of 12000 pre and post retirees was drawn from 1 Personal responsibilit y 20 (30)
twelve countries Of these 10800 (90) were pre-retirees 2 Level of awareness 30 (35)
and these were chosen for fur ther analysis of their plans 3 Financial capability Understanding 30 (25)
for retirement The Index that was developed forms an 4 Retirement planning 50 (50)
assessment of how well an individual perceives the adequacy 5 Financial preparedness 60 (60)
of his her own finances and financial awareness specifically 6 Income replacement 35 (35)
for addressing his retirement needs
Note that the weights devised to show the relative
The lsquotargetrsquo for the Index impor tance of each question in calculating the Index add to
The question on current savings activity was designated as the 225 These were then re-scaled so that a final scale of 1 to
target question (dependent variable) for predicting the level of 10 was calculated
preparedness for retirement Responses to this question were
then correlated with each of the six key questions (variables) Final scores by country below to understand which were driving the activity These weightings were multiplied by the actual scores for each
This was done because it was not felt to be correct to give respondent for each of the six Index questions and aggregated
each of the six variables described below an equal weight as to obtain a provisional score This was then adjusted to
they appeared to have quite different relationships to the give countr y scores out of 1 to 10 (A score of 1 to 10 had
target question sufficient differentiation to be used as the scale for analysis)
1 Personal responsibilit y for income in retirement
2 Level of awareness of need to plan for retirement
3 F inancial capability Understanding of financial matters
regarding plans for retirement
4 Retirement planning Level of development of plans
5 Financial preparedness for retirement
6 Income replacement Level of projected income replacement
The weighting To estimate the statistical significance of the decline in overall
scores in this yearrsquos Index is theoretically incalculable
Two things have changed from 2012 to 2013
1 C anada and China have joined the sample
2 The new countries have thus influenced the weights of
emphasis placed on the 6 variables used to calculate
the score hence the weights attached to the complex
calculation have changed
However it is noticeable that for countries which were sampled
in both time periods the mean scores for the six individual
variables have almost invariably declined and on average more
than half of them have shown a significant level of decline
In particular the question lsquoDo you think you will achieve this
incomersquo has for all countries shown a significant level of
decline We thus hypothesize that the comparative results
show a significant decline
The Young Pragmatic and Penniless Generation | 36
Net
herl
ands
Net
herl
ands
Net
herl
ands
Ger
man
yG
erm
any
Ger
man
yBase 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
Better off 7 4 23 Sw
eden
Swed
en11 5 7 8 3 11 14 50 5
Swed
en
About the same 19 18 27 23 8 19 18 13 29 29 24 21 U
ntie
dU
ntie
dU
nite
d Worse off 66 74 41 58 79 69 71 76 51 47 21 55
Kin
gdom
Kin
gdom
Kin
gdom
Donrsquot know 9 3 9 9 9 4 4 8 9 10 6 19
Fran
ceFr
ance
Fran
ce
Chart 2 Education of 20 ndash 29 year olds by country Q Please choose from the following list the highest level of educational or professional qualification you have
Spai
nSp
ain
Spa
in
Pol
and
Pol
and
Pol
and
Hun
gary
Hun
gary
Hun
gar y
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
dU
nite
d 100 100 100 100 100 100 100 100 100
Stat
es100 100 100
Stat
esSt
ates
Less than high school graduate 2 44 6 14 1 3 2 7 1 3 Ca
nada
Cana
daC
anad
aHigh school graduate 11 33 53 23 22 22 4 41 14 21 1 2
Some college or trade school 46 2 9 9 9 19 37 14 28 20 4 33 Ch
ina
Chin
aC
hina
College degree University degree 31 15 27 30 41 43 21 33 50 46 9 57
Postgraduate degree or 8 3 3 23 25 11 36 1 8 9 80 6 qualification Ja
pan
Japa
n Ja
pan
Other 2 4 1 1 1 2 0 5 0 6 2
None 0 1 1 0 1 0 0
NET Less than undergrad degree 61 82 70 47 34 46 43 66 42 45 11 37
NET Undergrad degree or higher 39 18 30 53 66 54 57 34 58 55 89 63
Chart 3 Aegon Retirement Readiness Index scores for young employees by country
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
NET Low Index (0-5) 80 64 79 81 85 78 81 73 65 61 61 87
NET Medium Index (6-7) 15 30 18 15 14 21 17 23 25 31 31 12
NET High Index (8-10) 4 6 3 3 1 2 2 4 10 8 7 1
Appendix 2 Country comparisons Chart 1 The majority of young employees believe that they will be worse off in retirement compared to their parents Q Do you think that future generations of retirees will be better off or worse off than those currently in retirement
37 | The Young Pragmatic and Penniless Generation
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsI always make sure that 27 34 27 26 17 14 19 22 35 33 32 20 I am saving for retirement
I only save for retirement G
erm
any
Ger
man
y21 27 20 13 17 21 16 6 17 24 20 24 occasionally from time to time
I am not saving for retirement now 6 11 8 11 5 15 9 4 10 8 9 5 although I have in the past Sw
eden
Swed
en
I am not saving for retirement 35 23 34 46 53 40 49 54 36 33 38 46 though I do intend to U
nite
dU
ntie
dK
ingd
omK
ingd
om I have never saved for retirement and 11 6 10 5 8 10 6 13 3 2 1 6 donrsquot intend to
Fran
ceFr
ance
Chart 5 Younger people are more likely not to be using any means of retirement savings Sp
ain
Spai
nQ Which financial means if any are you currently using to prepare for your retirement
Pol
and
Pol
and
only asked in Germany only asked in Spain
Hun
gary
Hun
gary
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
dSt
ates
Stat
es100 100 100 100 100 100 100 100 100 100 100 100
Defined benefit plan 16 10 25 29 15 3 76 11 20 13 5 Ca
nada
Cana
daDefined contribution plan 28 10 17 19 19 14 10 23 40 7 3
Private pension 8 18 14 10 5 9 4 13 12 40 66 4 Ch
ina
Chin
a Government pension social security 12 43 14 21 8 7 4 18 27 33 71 35
Stocks 5 12 14 7 4 17 7 2 13 10 23 9
Bonds 1 8 5 6 2 16 4 2 8 13 14 3 Ja
pan
Japa
n
Mutual funds 2 14 23 4 2 10 3 4 7 16 9 6
Investment insurances (annuities) 2 3 2 3 2 9 4 5 2 4 6 1
Savings accounts 23 37 38 25 23 6 29 15 36 37 65 36
Investment property 2 10 6 7 9 2 5 2 5 11 18 1
Employee stock purchase 1 1 1 4 1 29 0 4 1 7 1
My home 10 5 8 7 7 8 4 6 6 14 30 1
Reverse mortgage 1 4 2 4
My business 2 1 3 2 2 4 1 1 2 4 12 1
Inheritance 3 11 7 11 7 9 9 8 7 9 6 2
Annuities 1 15 2 2 1 4 3 2 1 2 8
Long-term care insurance 2 1 3 2 9 5 1 6 4 7 1
Life insurance 6 11 8 8 14 3 18 15 19 18 36 17
Unterstuumltzungskasse aus 2 Eigenmitteln finanziert
Unterstuumltzungskasse vom 2 Arbeitgeber finanziert
Chart 4 Younger employees are much more likely to aspire to save for retirement Which of the following best explains your approach to saving for retirement This can include money you contribute to any long-term
investment including pensions stocks and shares investment-linked insurances property etc
Q
The Young Pragmatic and Penniless Generation | 38
Plan de empleo mixto 2 (combinacioacuten de las dos anteriores)
Other 1 6 4 0 1 2 2 3 2 2 3 3
None nothing 8 14 12 23 25 31 6 27 21 17 3 24
Donrsquot know 29 6 17 13 19 8 4 9 7 7 0 9
hart 6 The younger generation has more negative associations of retirement Which if any of the following words do you most associate with retirement
Net
herl
ands
Net
herl
ands
Ger
man
yG
erm
any
Swed
enSw
eden
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
d100 100 100 100 100 100 100 100 100 100 100 100
Kin
gdom
Kin
gdom
Freedom 35 32 36 39 19 26 11 20 35 40 37 33
Opportunity 7 27 25 18 4 8 9 10 17 16 9 16 Fr
ance
Fran
ceLeisure 58 48 36 41 23 24 43 32 50 50 55 6
Excitement 2 5 3 8 2 6 1 2 17 17 4 3 Sp
ain
Spai
nPoverty 11 26 23 11 26 14 37 44 7 5 6 20
Insecurity 34 24 18 16 20 18 35 56 10 9 18 44 P
olan
dP
olan
dLoneliness 4 10 17 16 12 7 11 8 5 9 20 12
Ill health 2 19 7 14 15 9 49 23 6 6 29 11 H
unga
ryH
unga
ryDependent on others 11 11 5 18 14 8 18 19 14 6 11 4
Tired 3 4 8 10 14 10 17 6 7 7 13 19 U
nite
dU
nite
dFar away 38 19 25 21 61 32 2 13 33
Stat
es33 14 22
Stat
es
Boredom 14 16 6 12 16 12 15 8 12 12 16 17 Ca
nada
Cana
daEnjoyment 21 16 17 23 14 29 5 3 37 37 35 15
None of the above 0 1 1 2 0 2 1 1 2 2 1 2
Donrsquot know 2 2 3 3 2 2 1 2 0 Ch
ina
6 Ch
ina
hart 7 Many young employees think they are not on course to achieve target retirement income Ja
pan
Japa
n Do you think you will achieve this income [your estimated income needed in retirement]
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
I donrsquot know if I am on course to 56 37 57 59 50 39 49 48 48 41 22 68 achieve my retirement income
No I am on course to achieve around one-quarter (25) of my 10 14 9 13 15 14 14 13 10 10 10 7 retirement income
No I am on course to achieve around 12 20 14 11 19 19 18 15 12 11 23 12 half of my retirement income
No I am on course to achieve around three-quarters (75) of my 8 14 7 4 8 15 9 8 6 11 20 5 retirement income
Yes I am on course to achieve my 15 15 13 14 8 13 11 17 25 27 25 8 retirement income
CQ
CQ
39 | The Young Pragmatic and Penniless Generation
Chart 8 Young people in most countries expect to retire before 65 Q At what age do you expect to retire from all paid employment
Net
herl
ands
Ger
man
y
Swed
en
Uni
ted
Kin
gdom
Fran
ce
Spai
n
Pol
and
Hun
gary
Uni
ted
Stat
es
Cana
da
Chin
a
Japa
n
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
40 or under 0 1 1 0 0 1 3 1 5 12
41-50 1 2 3 5 2 2 6 3 9 4 37 9
51-59 4 4 4 6 2 4 11 5 7 10 30 1
60 5 11 8 12 10 13 19 12 12 16 21 27
61-64 2 11 10 2 20 7 4 13 5 3 1 2
65 17 22 44 31 34 32 16 26 26 32 3 25
66-69 42 32 15 9 12 29 20 13 9 9 0 1
70 19 11 10 18 10 5 10 9 13 12 0 6
71+ 5 5 5 9 4 5 5 3 7 5 1 4
Never 2 1 1 2 2 2 6 4 1 0 0
Donrsquot know 2 3 2 5 3 2 8 9 5 5 1 13
Mean 67 65 65 65 64 65 63 64 63 64 53 59
Median 67 65 65 65 65 65 65 65 65 65 55 60
Chart 9 Younger employees feel they donrsquot have money to invest for retirement Q What is the single biggest obstacle to you saving for retirement right now
Net
herl
ands
Ger
man
y
Swed
en
Uni
ted
Kin
gdom
Fran
ce
Spai
n
Pol
and
Hun
gary
Uni
ted
Stat
es
Cana
da
Chin
a
Japa
n
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
The uncertain economic environment 19 8 13 9 13 19 11 14 12 9 29 27
Lack of money to invest 28 41 33 43 47 34 48 55 47 50 6 19
Fear of poor investment returns over the coming years 2 5 10 7 5 6 8 2 6 8 14 6
Complexity of investment products 4 4 4 3 5 3 5 2 12 5
I donrsquot know how to go about investing for the long-term 2 3 10 8 5 5 3 3 6 8 7 9
The fees charged by financial services companies 2 4 4 2 4 3 4 2 3 5 2 5
I canrsquot afford to take financial advice 3 3 6 8 2 4 3 5 3 2 3 2
I donrsquot trust the financial services industry 12 11 8 6 5 10 6 2 2 3 5 4
I donrsquot see the need to save for the long-term 6 1 2 2 3 3 3 1 2 1 4 3
Concerns about unstable currencies currency fluctuations 2 5 1 3 3 3 4 3 4 5 15 2
Other (PLEASE STATE) 3 3 1 1 3 2 4 6 2 2 1
Donrsquot know 17 12 11 7 8 6 3 6 8 6 3 17
The Young Pragmatic and Penniless Generation | 40
Chart 10 More money would incentivize young employees to save for retirement Q Which if any of the following would encourage you to save for retirement
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsMore generous tax breaks on long-term savings and pensions 20 44 30 32 27 23 42 42 33 43 40 32 products
Ger
man
yG
erm
any
Access to financial education so that I am more aware of what 24 6 14 21 16 22 21 12 23 24 43 25 I need to do for myself
Swed
enSw
eden
Access to professional financial advice so that I have personalized
Uni
ted
20 24 23 23 15 21 25 9 22 23 44 13 U
nite
drecommendations on what steps
Kin
gdom
Kin
gdom
I need to take
Simpler investment products that 12 33 19 28 20 Fr
ance
18 27 16 32 28 36 10 Fr
ance
I can understand with less jargon
Better and more frequent information about my retirement 16 28 20 27 27 23
Spai
n20 18 25 31 45 22
Spai
nsavings
Better legal protection in case I am 12 18 13 18 10 24 18 13 13 19 21 6 P
olan
dP
olan
dsold the wrong product
A pay rise 46 54 44 64 55 50 70 72 67 64 53 37
A better retirement plan pension H
unga
ryH
unga
ry27 32 25 33 29 26 42 35 39 44 33 32 match from my employer
Other 4 2 1 1 2 2 3 3 2 U
nite
d3 0
Uni
ted
Stat
esSt
ates
Donrsquot know 17 9 16 10 10 12 3 8 8 5 3 17
Not applicable - I already have 3 3 4 2 2 1 1 1 2 2 3 sufficient savings Ca
nada
Cana
da
Chin
aCh
ina
Chart 11 A majority of younger employees do not have a written plan for retirement Q Which of the following best describes your retirement planning strategy
Japa
n Ja
pan
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
I have a written plan 7 18 10 9 6 8 6 5 13 10 8 4
I have a plan but it is not written 24 47 37 25 23 31 29 31 37 44 55 24
down
I do not have a plan 61 32 51 61 62 55 62 58 45 42 34 61
Donrsquot know 7 3 3 5 8 6 3 6 4 4 3 12
41 | The Young Pragmatic and Penniless Generation
Chart 12 For young employees friends and family are the leading source of retirement savings information Q And which of these sources (of information) is most important to you
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
Bank adviser 6 11 19 5 25 5 7 4 3 17 10 2 N
ethe
rlan
dsN
ethe
rlan
dsProfessional financial adviser 12 22 10 12 10 19 19 22 21 25 19 10
Insurance agent spokesperson 3 10 2 3 1 3 6 2 3 0 3 2 G
erm
any
Ger
man
yInsurance company website 3 1 3 2 4 4 2 2 1 3 1
Personal finance websites online 8 5 7 8 5 4 10 8 12 6 10 8 retirement planning tools Sw
eden
Swed
enPersonal finance media 2 2 2 2 2 6 3 1 2 1 6 2
Government website 7 1 3 6 U
nite
d5 2 3 3 2 3 7 1
Uni
ted
Kin
gdom
Kin
gdom
Bank website 2 3 3 2 1 0 3 2 1 6 3 3
My employer 12 8 4 9 4 7 5 12 8 5 4 1 Fr
ance
Fran
ceAccountant 2 6 4 4 1 3 1 3 5 5 1 3
Lawyer 2 3 1 2 2 8 4 2 1 2 2 0 Sp
ain
Spai
nFriends and family 21 22 30 28 24 26 18 24 26 20 25 24
None of these P
olan
dP
olan
dNot applicable 21 7 16 18 19 13 17 15 14 9 5 41
Hun
gary
Hun
gary
Chart 13 Most young workers feel their employer should provide some kind of pension Q In the future what if anything should employers do to help people plan for retirement
Uni
ted
Uni
ted
Stat
esSt
ates
Cana
daCa
nada
Chin
aCh
ina
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 Ja
pan
Japa
n Employers should be required to 24 43 20 40 21 26 20 28 37 34 20 30 contribute to workersrsquo pensions
Employers should be required to make a pension available but not to 12 13 7 17 20 15 15 4 11 14 22 5 contribute into it
Employers should not be required to provide pensions but should 15 9 12 8 9 8 11 6 11 9 9 11 provide information on how to plan for retirement
Employers should provide a range of flexible benefits and 13 18 18 16 15 27 25 28 21 22 45 12 allow individuals to choose which benefits they actually want
Nothing ndash it should be left to individual employees to take care 2 2 5 1 4 3 3 5 6 5 1 9 of themselves
Nothing ndash it should be left to the government to take care of its 2 5 5 2 5 8 15 14 1 4 0 4 citizens
Donrsquot know 30 10 32 17 27 12 12 15 13 13 3 29
The Young Pragmatic and Penniless Generation | 42
Chart 14 Workplace pensions are relatively low down in young workersrsquo priorities when choosing a job Q How important to you would the following workplace benefits be if you were choosing your next job
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsBasic salary 86 93 88 91 88 92 90 94 90 93 96 94
Holiday entitlement 87 94 89 91 92 94 91 94 93 94 96 91 G
erm
any
Ger
man
yOvertime and bonus pay 86 93 87 88 89 90 89 94 90 91 97 90
Location of workplace 88 91 86 92 89 90 89 92 93 93 92 86 Sw
eden
Swed
enMedical health insurance 73 92 84 65 86 87 88 87 93 94 98 83
Opportunities for career progression 86 91 81 90 90 94 91 94 92 91 96 81 U
nite
dU
nite
dAccess to a workplace retirement 85 85 81 82
Kin
gdom
78 84 80 78 84 86 93 74 K
ingd
omplan with employer contributions
Access to good training provision 85 87 85 88 86 91 85 93 86 90 95 74 Fr
ance
Fran
ceFlexible working hours 79 87 58 86 81 89 81 87 91 91 92 57
Life insurance 72 75 79 69 80 82 Sp
ain
84 80 81 88 93 74 Sp
ain
(death in service benefits)
Phased retirement or other employer programs providing for 74 54 75 71 72 81 76 74 76 81 91 65
Pol
and
Pol
and
a transition into retirement
Ability to work past the normal 68 57 64 65 64 74 72 65 74 76 80 70 retirement age H
unga
ryH
unga
ry
Access to a workplace retirement 62 74 61 68 59 77 61 47 68 74 89 65 plan without employer contributions U
nite
dU
nite
dSt
ates
Stat
esEmployee share plans 50 72 54 65 59 73 61 51 64 73 91 55
Access to creche help with the 67 75 64 56 69 79 75 83 58 69 89 68 cost of childcare Ca
nada
Cana
da
Opportunities for foreign travel 53 54 60 55 50 71 58 66 57 61 79 37
Company car 51 46 45 47 49 63 51 49 36 49 69 Ch
ina
39 Ch
ina
Japa
n Ja
pan
Chart 15 Young workers think the state pension will need to be reformed Q With the cost of government pensions becoming a greater concern as people live longer which if any of the following do you think
the government should undertake
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
The government should reduce the overall cost of state pension 15 33 16 15 16 20 28 22 21 26 30 16 provision by reducing the value of individual pension plans
The government should increase overall funding available for the 12 21 30 22 14 34 19 26 21 18 29 10 state pension through raising taxes
43 | The Young Pragmatic and Penniless Generation
he government should take a alanced approach with some 27 26 12 30 28 23 24 16 34 31 38 41 eductions in individual payments nd some increases in tax
he government should not do nything State pension provision 7 2 12 5 3 4 3 3 5 4 0 5 ill remain perfectly affordable in he future
onrsquot know 38 19 29 29 39 20 26 34 19 21 4 28
Net
herl
ands
art 16 Products which protect against investment risk are the most important to young workers ( interested) Thinking about the types of financial products you could purchase to help provide you with security in retirement on a scale of 1 to 5
how interested are you in the following options G
erm
any
Swed
en
Uni
ted
Kin
gdom
ase 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 Fr
ance
100 100 100 100 100 100 100 100 100 100 100 100
product providing a guaranteed etirement income stream or 75 81 73 76 74 83 78 76 87 85 94 69
Spai
nifetime income in retirement
product which protects my 74 79 73 76 72 82 77 74 84 86 94 65 etirement income against inflation P
olan
d
product which guarantees that I 72 82 73 78 75 81 76 73 86 86 90 67 onrsquot lose my initial investment H
unga
ry product which helps meet the ost of long-term care if I become 74 79 74 77 70 79 76 71 86 85 84 66
Uni
ted
nable to look after myself St
ates
product which protects my capital 71 81 71 76 68 76 77 73 84 83 93 65 rom poor investment returns Ca
nada
product which generates a etirement income and allows 69 78 71 75 68 81 77 72 84 86 94 70 e to take a lump sum from the
Chin
anvestment should I need to
product where the annual 66 78 68 75 72 79 77 70 85 86 87 64 anagement charges are kept low Ja
pan
product which enables me to eep some control over how my 71 73 70 75 72 80 75 69 88 85 91 63 avings are invested during my etirement
product which manages the sset allocation so that I am never 68 70 67 73 66 76 71 67 80 83 95 60 xposed to a level of risk Irsquom not omfortable with
product which continues to rovide a retirement income to my 74 78 71 75 73 81 79 73 86 82 94 60 pouse in the event that I die first
product which protects my family gainst having to pay estate taxes 73 76 71 74 75 81 75 69 82 82 89 56 hen I die
product which locks in investment 72 71 63 73 64 71 59 56 81 84 89 61 eturns during the good years
Tbra
Tawt
D
ChQ
B
Arl
Ar
Ad
Acu
Af
Armi
Am
Aksr
Aaec
Aps
Aaw
Ar
The Young Pragmatic and Penniless Generation | 44
Summary Todayrsquos world is changing rapidly The pace of change is felt by none more than the twentysomething generation whose world has been transformed by developments such as the Internet the rise of social media the onset of affordable air travel and the rapid expansion of higher education Furthermore economic growth in developing markets has transformed the opportunities and outlook of millions of young people in what were once low-income countries particularly in China one of our survey countries
The Young Pragmatic and Penniless Generation | 2
Opportunities and obstacles Young employees are realists in a changing world This changing world presents young people with many Working adults between the ages of 20 and 29 expect to
opportunities but also with uncertainties and obstacles which be worse off financially in retirement than their parents (59)
impact their financial planning and long-term financial security and take on more financial responsibility including funding their
Cast-iron government and employer retirement benefits are own retirement Additionally 37 believe that they will likely
less prevalent than before and have given way to a more fall short of their retirement needs Furthermore 27 believe
individualistic approach based on personal responsibility that their retirement shortfall will be large at least half of what
In an uncertain labor market employment is less secure Todayrsquos they estimate they will need in retirement As a result 44 are
employees switch employers take career breaks and undertake pessimistic that they will not be able to choose when to retire
periods of self-employment or contract work A steady salary a luxury enjoyed by many of their parents Another factor is the
progression has become the exception rather than the rule financial impact of caring for the older generation with 28
Major life goals such as education funding and home ownership expecting to provide financial support for retired parents
are more costly and harder to achieve than in previous and 40 agreeing that lsquoadult children of retirees should
generations and also compete with retirement funds In this help provide financial support for their parents if neededrsquo
new reality there is a clear role for employers and retirement
providers supported by government to embrace young Forecasts support such pragmatism Today the average
employeesrsquo willingness to take control of their financial future retirement age is around 63 years but by 2050 when those
in their twenties today will be entering retirement the official
Key findings retirement age of many countries will be an average of
The Changing Face of Retirement The Young Pragmatic 67 to 68 years due in part to increased longevity an aging
and Penniless Generation reveals a retirement shortfall for workforce and receding government benefits In addition
employed young adults between the ages of 20 and 29 that youth unemployment is at historically high levels In Spain this
is due to a lack of opportunity to save rather than a lack of stands at 53 for 15 to 24 year olds the highest of our survey
will A range of uncertainties and obstacles some driven by life countries followed by Hungary (28) and Poland (27)
stage many generationally unique conspire to make saving for
retirement harder today than it was for older generations Young employees are ready to do what it takes to save for Young employees recognize these challenges and are prepared their retirement to take responsibility for the solution To do this they require A surprising and encouraging two-thirds of young employees are
employers retirement providers and governments to provide committed to or have the ambition to save for their retirement
suitable financial expertise knowledge and products A core 25 of young employees are habitual savers who lsquoalways
make surersquo that they are saving for retirement and a highly
encouraging 41 of young employees are lsquoaspiringrsquo savers
who intend to save Furthermore the need to save is widely
recognized ndash 57 of young employees believe that retirement
savings are important but not a priority for them at the moment
Taken together these findings suggest that many young
employees are prepared to lsquoownrsquo the retirement problem
having accepted the new reality perhaps more readily than
some older employees
3 | The Young Pragmatic and Penniless Generation
Aspiring savers unable to meet their savings goals can be Young employees can meet their retirement goals and turned into habitual savers with better educational support aspirations with access to flexible financial products which advice and information suit the life they lead The survey reveals that a significant percentage of younger Todayrsquos young employees require flexible savings products
employees (47) do not know if they are on course to achieve such as more portable retirement benefits and other workplace
their desired retirement income ndash a lack of insight into the savings offerings which move with them between employers
future which may contribute to savings inertia Addressing and across different life stages Young employeesrsquo employment
this shortfall many young employees express an interest in patterns are different to those of previous generations
financial education and advice Fully 26 say that lsquobetter and The survey revealed that 39 are planning to look for a new
more frequent information about my retirement savingsrsquo would job in the next 12 months compared to 29 of all employees
encourage them to save more for retirement 23 cite lsquoaccess and 31 of young employees are thinking about quitting their
to a professional advisor with personal recommendationsrsquo and jobs At the same time young employees place a high value
22 want lsquofinancial education so I am more aware of what I on occupational benefits with 87 believing a workplace
need to do for myselfrsquo retirement plan with employer contributions would be an
important factor when choosing their next job
Tellingly almost a quarter of young employees (24) cite
friends and family as the most important source of information These dual needs of workplace retirement plans and high levels
in choosing how to save for retirement which suggests that of labor mobility can be resolved with a more flexible range of
employers and professional financial services companies are employer benefits A third (33) of young employees would
either not providing appropriate support or are not providing be encouraged to save for retirement by matched retirement
support in a manner that is perceived to add value to these contributions from their employer Again clarity and insight are
employees Given the severe long-term repercussions themes with 24 stating that access to simpler investment
of poor retirement readiness it is essential that employers products would increase their propensity to save Finally there
and retirement companies make haste in filling this gap is a leading role for government to play through the creation of
stable long-term financial and taxation policy Among young
employees 34 stated that more generous tax breaks on
long-term savings and retirement plans would encourage
them to save
The Young Pragmatic and Penniless Generation | 4
Introduction Todayrsquos twentysomethings are young but hardly carefree At a time in life when previous generations built a career and laid the foundations for a secure future many of todayrsquos young workers face unprecedented financial challenges Student debt uncertain employment prospects high housing costs the potential support of elderly parents and receding government retirement benefits are just a few of the economic and financial uncertainties that undermine their ability to plan and save for their retirement At a time in life when savings have the longest time horizon for growth these challenges work against young workersrsquo future retirement readiness
5 | The Young Pragmatic and Penniless Generation
The structure and methodology of this report specialized public policy interventions Thus the research reflects
The Young Pragmatic and Penniless Generation polled employees views of the mainstream working population
and retirees in 12 countries Canada China France Germany
Hungary Japan the Netherlands Poland Spain Sweden the A guide to this report United Kingdom and the United States These countries were The reportrsquos conclusions and recommendations flow from an
selected on the basis of having distinctive retirement systems examination of todayrsquos young employees in the context of older
as well as varying demographic and aging trends i and retired employees
bull Par t 1 of this report explores the financial pressures that Respondents were interviewed using an online panel survey young people face from unemployment intermittent
in their native language ii in January and February of 2013 employment and extended full-time education
The sample comprised 10800 employees including 2722 people bull Par t 2 reviews the savings outlook including young employeesrsquo between the ages of 20 and 29 and 1200 retirees The 12 attitudes toward saving expectations for retirement income
countries surveyed represent employees who cumulatively have and retirement age and perceived responsibilities toward
access to around 85 of the worldrsquos private retirement assets iii parent care
(excluding government retirement benefits) bull Par t 3 examines some of the potential savings obstacles such as household economics and the income position of
Issues covered included attitudes toward retirement the individual employee and the importance of advice and
preparedness the role of government and employers in the education in altering youth perceptions of financial priorities
provision of retirement benefits and the impact of the financial bull Par t 4 explores how to encourage young people to save and crisis on attitudes to investment risk and retirement planning the role of employers in this
The survey did not include the self-employed unemployed
or long-term incapacitated since each of these groups faces The final part sets out recommendations for improving the
specific retirement planning challenges which may require retirement readiness of this important group within society
The Young Pragmatic and Penniless Generation | 6
Part 1 Young people at risk in an uncertain world As societies enjoy the benefits of longer life expectancy people will need to work harder to secure a comfortable retirement This will mean saving more during working life and a redefinition of how to approach retirement When it comes to achieving this important life goal however some groups are more at risk This report examines one such group in detail young employees at the beginning of their working life
7 | The Young Pragmatic and Penniless Generation
Countr y Median Income
lsquo(nearest 000) Married Undergrad degree or more Dependent children (any)
All 20-29 year olds $27500 25 53 25
Netherlands $37000 17 39 20
Germany $38000 33 18 27
Sweden $39000 16 30 32
United Kingdom $48000 24 53 24
France $28000 23 66 26
Spain $23000 13 54 25
Poland $13000 38 57 28
Hungary $6000 31 34 16
United States $43000 26 58 27
Canada $51000 36 55 27
China $18000 31 89 30
Japan $37000 12 63 11
Who are younger employees are also more likely than average to be single and much less
This report defines younger employees as people between likely to have children A quarter are married compared to an
20 and 29 years of age a group that belongs to the Millennials average of 64 for the generation now in their 50s
generation born between 1980 and 2000 This group differs
widely among countries although there are clear trends Education levels vary across the countries included in this research
Many have been in the labor market just a few years after a long due to differences in higher education systems (Chart 1) Overall
period of higher education Unsurprisingly median household those aged 20-29 were more likely than the average respondent
incomes are lower around $27500 according to this research to have at least an undergraduate degree The increasing
compared to an overall median of $46000 Twentysomethings prevalence of education has both positive and negative impacts
Chart 1 A portrait of younger employees Q Which of the following reflects your annual household income before taxes
Q What is your marital status
Q Please choose from the following list the highest level of educational or professional qualification you have
Q How many children do you have who are financially dependent on you Please include all children and stepchildren
Why are young people at risk Such changes will not be achieved easily in the current climate
Todayrsquos young people face a challenging set of circumstances The global financial crisis of 2007-8 not only created a need
An aging society means fewer employees supporting more for long-term structural retirement reforms it also led to the
retirees which is profoundly affecting how societies fund more immediate menace of historically high levels of youth
retirement In most of the countries surveyed lsquotraditionalrsquo unemployment The International Labour Organization (ILO)
retirement provision such as government retirement benefits estimated that in 2013 unemployment affected 73 million young
and other forms of social security or employer-sponsored people aged 15-24 worldwide representing more than 126
retirement arrangements like defined benefit company of all young people iv Across the EU 228 of people under 25
retirement plans are already subject to long-term reforms were unemployed in 2012 and in Spain the figure was 53 v
These reforms will reduce the value of future entitlements It is worth noting that the study is conducted among those who
by lowering retirement income benefits and raising the age are currently employed (part- or full-time) so the findings do not
of retirement and are likely to begin to take full effect from fully take into account the significant number of unemployed
the middle of this century just as the current generation young people
of twentysomethings enters retirement Consequently the
retirement prosperity enjoyed by todayrsquos Baby Boomers will not
be shared by subsequent retiring generations unless there is a
major change in their savings behavior
The Young Pragmatic and Penniless Generation | 8
13
4
16
3
Chart 2 Youth unemployment in 2005 and 2012 across Aegon survey countries (excluding China)
60 1
24
14
3
2005 2
06
2012
23
8
45
15
2
81
19
4
30 2
81
86
79
15 9
4
95
37
8
0 2
65
y
Japan
Spain
19
7
Canad
a
Fran
ce
Poland
Germ
any
Hunga
r
Sweden
OECD tota
l
Nether
lands
53
2
United S
tate
s
United K
ingdom
22
Note Youth unemployment rate of youth labour force (age 15 - 24) vi
23
7
12
2
21
11
3
16
2
The problems of high levels of youth unemployment and economic uncertainty affect those with jobs as well as those without
as they breed lower levels of job security and downward pressure on wages They also have a significant impact on the psychology and
confidence of younger people including those in work and their confidence in their short-term and retirement finances As the survey
findings reveal most young employees expect to find themselves worse off than their parentsrsquo generation when they enter retirement
(Chart 3)
Chart 3 The majority of young employees believe that they will be worse off in retirement compared to their parents Q Do you think that future generations of retirees will be better off or worse off than those currently in retirement
Base 20-29 year olds
Donrsquot knowBetter off
8 13
Total Respondents
2722
20 About
the same
59
Worse off
9 | The Young Pragmatic and Penniless Generation
Another major influence on the ability of young employees to save for retirement is the growth of higher education One positive
is that college graduates are more likely to benefit from lower unemployment rates fare better during economic downturns and
experience higher incomes across their lifetime supporting aspirations like home ownership vii and helping to sustain long-term
savings and increased levels of retirement preparedness (Chart 4)
Chart 4 Graduates are likely to enjoy a greater sense of retirement preparedness Q Thinking about how much you are putting aside to fund your retirement are you saving enough
Base All lsquovery prepared for retirementrsquo
30 27
17 16Postgraduate degree or qualification
College degree University degree Some college or trade school
8 High school graduate
1 Below high school graduate Other
Conversely full-time education delays entry into the labor Why is this group of young employees important arket causing a loss of several years of full-time earnings By the middle of the century todayrsquos 20-29 year olds will
otential Moreover ballooning levels of student debt may have led the world economy through an economic recovery
ignificantly delay the onset of post-graduation saving and dramatic demographic shifts during a period of greater
etween 2004 and 2012 for example student debt in the uncertainty for modern retirement systems and other issues
nited States tripled to $966 billion nationwide The effect In developing countries such as China this group will be more
f this is that todayrsquos younger employees must take greater affluent than their parents but still need to deal with the
ersonal responsibility for their savings a challenge in the consequences of a rapidly aging population and an economy
urrent economic and financial circumstances which has passed its phase of rapid growth
For all of their challenges however this group of young people
represents the biggest opportunity to change societal savings
behaviors for the better The Aegon Retirement Readiness Survey
2013 provides insights into how best to achieve this through a
greater understanding of the grouprsquos outlooks and savings habits
m
p
s
B
U
o
p
c
The Young Pragmatic and Penniless Generation | 10
45
29
20
6
50
24
21
6
56
19
21
4
46
27
21
6
Better off About the same
Worse off Donrsquot know
All work
ers
20-29 ye
ar old
s
Male 2
0-29 ye
ar old
s
Fem
ale 2
0-29 ye
ar old
s
Chinarsquos young employees bucking the gloomy trend optimistic that their economy will continue to expand over
A key finding of this yearrsquos Aegon Retirement Readiness the next 30 years Concerns about the sustainability of
Survey is that Chinese employees are far more confident growth remain however Just 37 of Chinese 20-29 year
and optimistic about their financial future than employees olds believe that the Chinese economy will improve over
in other countries This is also true of younger employees the next 12 months ndash indeed 2013 will see the economyrsquos
Of those Chinese aged 20-29 half (50) believe that they slowest expansion since 1990 x Long term Chinarsquos rapidly
will be better off in retirement than those currently in aging population makes creating a comprehensive and
retirement Younger Chinese men are the most optimistic sound retirement system an urgent priority xi Coverage has
with 56 believing that they will be better off expanded in the past 10 years with reforms such as the
introduction of the Enterprise Annuity in 2005 yet it is still
This optimism is relatively justified Since 1980 Chinese GDP not clear how China will build a universal retirement system
per capita has increased thirty-fold from $193 to $6091 across both the government-sponsored and private sectors
in 2012 viii While this dramatic increase has not benefitted However the success of reforms carried out to date suggests
all Chinese equally ndash by the Chinese governmentrsquos measure that tax incentives and efforts to improve awareness are
99 million rural Chinese live in poverty ix ndash huge progress required as part of any long term solution
has been made and young people in China are generally
Chart 5 Chinarsquos younger employees are confident of a better retirement Q Do you think that future generations of retirees will be better off or worse off than those currently in retirement
Base Respondents in China
11 | The Young Pragmatic and Penniless Generation
Part 2 The savings outlook of young employees This chapter explores the financial behaviors and savings gaps and needs of 20-29 year olds through their attitudes toward financial issues the wider economy and the savings required for a comfortable retirement
The Young Pragmatic and Penniless Generation | 12
75
21
4
69
27
4
64
31
4 5
7
36
7
20-29
30-39
40-49
50-59
44
40
16
NET Low Index (0-5)
NET Medium Index (6-7)
NET High Index (8-10)
60-69
Retirement readiness and young employees However many young employees have concerns about achieving
Retirement is seen as a major life stage by young employees this Over a third (38) are pessimistic that they will not have
They typically expect to spend an average 20 years of their lives enough to live on in retirement and 44 are pessimistic about
in retirement a definition of retirement that is consistent across being able to choose when they retire Furthermore 28 have
all working age groups Retirement conjures broadly positive made no plans at all for their retirement which may help explain
associations Fully 63 of employees in their twenties aspire some of these concerns Health worries are less of an issue with
to travel during retirement 39 see it as a period of leisure 52 being optimistic that they will enjoy good health in old age
and 30 associate it with freedom The need to plan and save although 20 believe that they will not which is perhaps related
for this phase of life is also widely accepted Half (50) of to the 17 who associate retirement with ill health in general
employees in their twenties are aware of the need to save and
64 feel a high or very high degree of personal responsibility Overall 75 of employees in their twenties achieved a low
to ensure sufficient income for retirement retirement readiness score of 0-5 on the Aegon Retirement
Readiness Index (please refer to the glossary and Appendix 1 for
an explanation of the Index) The percentage of employees with a
low score of 0-5 drops with each increase in age group and is 44
among those in the lsquoat retirementrsquo group of 60 to 69 year olds
Chart 6 Aegon Retirement Readiness Index scores for employees across age groups For more information on the ARRI see page 36
Base All aged 20 - 69
Life stage and savings attitudes Getting married and starting a family are two such events
he Retirement Readiness Index reveals that retirement Of employees in their twenties 25 are married and
reparedness is to some extent age- and life stage-related 25 have children whereas for those in their 30s 54 are
hart 6) For younger employees the idea that retirement is married and 56 have children representing a major shift
r awayrsquo combined with lower earnings and other spending toward parenthood
riorities (such as higher education or purchasing a house)
an be powerful obstacles to saving for retirement Thus while Encouragingly while young employees are less likely to
5 of all employees say that they lsquoalways make surersquo that they have started saving for retirement many see themselves as
re saving for retirement just 25 of 20-29 year olds do so future lsquoaspiringrsquo savers Fully 41 intend to save in the future
t present over half (57) of 20-29 year olds are not saving compared to 27 of all employees and only 7 do not intend
r retirement compared to 46 of all employed adults to save for retirement This large group of aspiring savers
ven in China where 44 are always saving for retirement who are committed to the idea of putting money aside for
st 32 of 20-29 year olds do so retirement challenges the view that young people are unwilling
to save Furthermore since converting these young employees
his life cycle effect can be seen in numerous ways At the from aspiring savers to regular savers may depend on the
utset of adult life employees experience lower income and right economic conditions and appropriate financial incentives
igher spending as they prioritize and fund life events with a helping them is a major opportunity for governments and
ignificant impact on their ability or desire to save for retirement employers
T
p
(C
lsquofa
p
c
3
a
A
fo
E
ju
T
o
h
s
13 | The Young Pragmatic and Penniless Generation
35 25 20 19 12 9 27 41 7 7
I always make sure I only save for I am not saving for I am not saving for I have never saved that I am saving retirement occasionally retirement now although retirement though for retirement and for retirement from time to time I have in the past I do intend to donrsquot intend to
All 20 to 29 year olds
NET Low Index (0-5)
NET Medium Index (6-7)
NET High Index (8-10)
Chart 7 Younger employees are much more likely to aspire to save for retirement but the majority are not saving Q Which of the following best explains your approach to saving for retirement This can include money you contribute to any
long-term investment including pensions stocks and shares investment-linked insurances property etc
Other findings support the assertion that younger savers This can be seen in Chart 8 More 20-29 year olds claim that
are open to increasing their retirement savings Over a third they are not likely to be saving for retirement by any means
(37) of 20-29 year olds feel lsquovery responsiblersquo for ensuring (17 against 12 for all adults) and are generally less likely
a sufficient retirement income Note however that this does to use any of the savings products mentioned Revealingly
not translate into better developed financial plans and savings 20-29 year olds are far less likely to name lsquogovernment benefits
strategies Only 7 in this age group feel they have lsquowell in retirementrsquo as a source of retirement income although almost
developedrsquo personal retirement plans and 33 say they are all respondents have some such entitlement This may be due
lsquohardly saving anythingrsquo for retirement Clearly awareness of the to unawareness of government benefits and or greater
retirement situation does not translate into actual retirement scepticism about governmentsrsquo ability or willingness to
planning activity provide for them in old age
The Young Pragmatic and Penniless Generation | 14
Chart 8 Younger people are more likely not to be using any means of retirement savings Q Which financial means if any are you currently using to prepare for your retirement
33 Savings accounts 31
36 Government pension social security 24
25 Defined benefit plan 21
22 Private pension 17
23 Defined contribution plan 15
20 Life insurance 15
14 Stocks 10
14 My home 9
12 Mutual funds 8
9 Inheritance 7
9 Bonds 7
8 Investment property 7
5 Employee stock purchase 5
5 Investment insurances (annuities) 4
4 Long-term care insurance 4
6 Annuities 3
My business 2 3
Reverse mortgage 1 1
Other 3 2
12 None nothing 17
6 Donrsquot know 10
All 20 to 29 year olds
Leisure
Freedom
Far away
Insecurity
Enjoyment
Poverty
Ill health
Boredom
Opportunity
Dependent on others
Loneliness
Tired
Excitement
None of the above
Donrsquot know
Retirement associations What does the younger generation feel about retirement and want to get out of it Perhaps unsurprisingly 20-29 year olds are more
likely to be negative than older respondents associating retirement with boredom loneliness and ill health They are also far more
likely to believe retirement is lsquofar awayrsquo which is likely to be a barrier to retirement saving
15 | The Young Pragmatic and Penniless Generation
Chart 9 The younger generation has more negative associations with retirement Q Which if any of the following words do you most associate with retirement
44 Leisure 39
36 Freedom 30
17 Far away 26
25 Insecurity 25
25 Enjoyment 21
19 Poverty 19
15 Ill health 17
9 Boredom
13
16 Opportunity
13
10 Dependent on others
12
9 Loneliness
11
0
r olds
7Tired
1
6Excitement
6
2None of the above
1
2Donrsquot know 2
All 20 to 29 yea
Aspirations and responsibilities for retirement Income levels in retirement ung people have similar retirement aspirations to the general A high proportion (47) do not know if they are on course
pulation for example travel (63) spending time with to achieve their retirement income goal Combined with the
iends and family (61) and pursuing new hobbies (52) high level of financial responsibility young employees expect
r them however retirement also includes the responsibility of to assume in retirement it is clear that people not only need
ring for others Two-fifths (40) believe that lsquoadult children to build much greater awareness of what kind of financial
retirees should help through providing financial support to pressures they are likely to face in retirement but also require
eir parents if neededrsquo and 28 believe that this will affect greater support in establishing realistic retirement income
em directly in retirement through providing financial support targets which are capable of meeting their needs
their parents A fifth (21) also expect to spend some of
eir retirement caring for other family members while just
donrsquot expect to provide for anyone compared to 40 of all
ployees Clearly todayrsquos young employees anticipate serious
ancial responsibilities in their retirement
Yo
po
fr
Fo
ca
of
th
th
to
th
30
em
fin
The Young Pragmatic and Penniless Generation | 16
Chart 10 Many young employees do not think that they are on course to achieve target retirement income Q Do you think you will achieve this income [your estimated income needed in retirement]
Base 20-29 year olds
Yes I am on course to achieve my retirement
income
16
47
12
16
10
I donrsquot know if I am on course to achieve my
retirement income
No I am on course to achieve around
one-quarter (25) of
No I am on course to achieve around half of my
retirement income
No I am on course to achieve around
three-quarters (75) of my retirement income
532
China
586
Japan
United S
tate
s
628
Poland
635
Canad
a
636
Hunga
r
638
y
Fran
ce
645 647
Spain
Sweden
649
United K
ingdom
651
Germ
any
653
Nether
lands
666
my retirement income
When will young people retire Media reports about the need to raise the age of retirement appear to have influenced younger employees Fully 44 of 20-29 year
olds do not expect to be able to choose their retirement date although the younger generation do expect to retire at a similar age
to older employees 63 This varies considerable by country In the Netherlands young employees expect to retire eight years later
than those in Japan Some countries such as China and Japan have surprisingly low expected retirement ages suggesting that young
employees may benefit from having a better understanding of when government or workplace retirement benefits kick in
Chart 11 Young people in most countries expect to retire before 65 Q At what age do you expect to retire from all paid employment
Base 20-29 year olds
Despite expecting to retire at the same age as their parents younger employees are more open to a transition into retirement
reflecting their more flexible outlook toward work Around half (51) are happy to change the way they work in some way as they move
into retirement Just 8 expect to keep working as they do currently
17 | The Young Pragmatic and Penniless Generation
Part 3 What is holding young employees back Insights into what young employees feel is holding them back from saving or saving more can be used to encourage younger people to adopt more positive savings behaviors This chapter explores the attitudes of young employees toward the financial obstacles they face and asks what actions they have taken in preparation for retirement The findings reveal that while the majority lacks adequate planning for their retirement needs financial shortcomings are only part of the stor y Spending preferences play a key role in the savings gap of advanced economies
The Young Pragmatic and Penniless Generation | 18
Lack of money to invest 37
16 The uncertain economic environment
7 Fear of poor investment returns over the coming years
6 I donrsquot trust the financial services industry
6 I donrsquot know how to go about investing for the long-term
4 oncerns about unstable currencies currency fluctuations
4 Complexity of investment products
4 I canrsquot afford to take financial advice
3 The fees charged by financial services companies
3 I donrsquot see the need to save for the long-term
Other 2
Donrsquot know 8
A pay rise
More generous tax breaks on long-term savings and pensions products
A better retirement plan pension match from my employer
Better and more frequent information about my retirement savings
Simpler investment products that I can understand with less jargon
Access to professional financial advice so that I have personalized recommendations on what steps I need to take
Access to financial education so that I am more aware of what I need to do for myself
Better legal protection in case I am sold the wrong product
Other
Not applicable - I already have sufficient savings
Donrsquot know
Obstacles and incentives to saving
Chart 12 Younger employees feel they donrsquot have money to invest for retirement Q What is the single biggest obstacle to you saving for retirement right now
Base 20-29 year olds
C
What is the single biggest obstacle preventing twentysomethings that they rank pressing and desirable life goals such as marriage
m saving for retirement Not having enough money to invest starting a family vacations and other leisure activities above the
top of the list cited by over a third (37) although this figure need to plan for retirement This suggests the savings gap is
ops to just 6 in the emerging market of China where mean preference-driven
omes are the lowest by far ($18000) suggesting that lack of
sh may be partly a state of mind Young employees in China The biggest obstacle to retirement savings cited by one-eighth
actually more worried about local concerns such as economic (13) of respondents is either not knowing how to invest for the
certainty (29) and currency instability (15) Behavioral long-term or the complexity of investment products charges and
ance has an impact too with the way young employees frame fees Ready solutions to this include improving young employeesrsquo
eir financial priorities creating its own obstacles to saving financial literacy about retirement planning and creating easier
many as 57 of 20-29 year olds believe that saving for access to professional financial advice
tirement is important but not a current priority suggesting
fro
is
dr
inc
ca
are
un
fin
th
As
re
19 | The Young Pragmatic and Penniless Generation
Chart 13 More money would incentivize young employees to save for retirement Q Which if any of the following would encourage you to save for retirement
Base 20-29 year olds
57 A pay rise
More generous tax breaks on long-term savings and pensions products
34
A better retirement plan pension match from my employer
33
Better and more frequent information about my retirement savings 26
Simpler investment products that I can understand with less jargon 24
Access to professional financial advice so that I have personalized recommendations on what steps I need to take 23
Access to financial education so that I am more aware of what I need to do for myself 22
Better legal protection in case I am sold the wrong product 16
Other 2
Not applicable - I already have sufficient savings 2
Donrsquot know 10
Chart 14 Very few younger employees have a written plan for retirement Q Which of the following best describes your retirement planning strategy
Base 20-29 year olds
5 Donrsquot know I have a
written plan
8
34 I have a plan but it is not
52 written down
I do not have a plan
Turning to incentives greater remuneration predictably tops a list Retirement planning of what would encourage 20-29 year olds to save for retirement Retirement planning is essential to adequate retirement saving
More tellingly a third (33) would like their employer to provide although it is somewhat lacking in todayrsquos younger employees
a better retirement plan into which both parties contribute Over half (52) have no retirement planning strategy at all
Better information and simple products would also help more and only 8 have noted down their retirement strategy
people to save A quarter (26) would be encouraged to save by
better and more frequent information about retirement savings Nevertheless the respondents polled believe that the current
while a similar number (24) want simple investment products global economy makes retirement planning increasingly
that are easy to understand As with the previous question a important ndash 71 agreed with this statement It is clear from this
lack of investment knowledge and the complexity of investment that young people between the ages of 20 and 29 do not lack
products are revealed as obstacles to savings the will to save they lack the opportunity
The Young Pragmatic and Penniless Generation | 20
Part 4 Creating the right conditions for young employees to save How may young employeesrsquo obstacles to saving be overcome For retirement readiness this will be a defining question of the early twenty-first centur y ndash and an extremely challenging one given the number of serious issues affecting younger employeesrsquo finances What was learned in the previous chapter about encouraging young employees to save is a start This chapter examines which areas and triggers to saving can be unlocked and whether government employer or individual should take most responsibility
21 | The Young Pragmatic and Penniless Generation
Friends and family
Professional financial adviser
17
24
Bank adviser 9
Personal finance websites online retirement planning tools
My employer
Government website
4
8
7
Insurance agent spokesperson
Accountant
3
3
Personal finance media 3
Lawyer
Bank website
3
2
Insurance company website
Donrsquot know
2
15
Information and advice on retirement saving strong theme revealed by our findings is that younger This finding is remarkably consistent across the countries
mployees want more information on savings products and sur veyed despite significant differences in market makeup
etter access to advice The largest share 24 (compared although some differences exist For instance a quar ter
o 17 for all employees) finds friends and family to be the (25) of young employees in France turn to bank advisers
ost important source of advice followed by professional for financial information nearly triple the number among all
dvisers (17) and bank advisers (9) That young employees young people (9)
urn to friends and family first suggests an unmet need for
rofessional financial advice This is both a challenge and an
pportunity for the financial ser vices sector
hart 15 For young employees friends and family are the leading source of retirement savings information Which of these sources (of information) is most important to you
ase 20-29 year olds
A
e
b
t
m
a
t
p
o
CQ
B
What is the role of the workplace in retirement planning Does this influence what retirement benefits younger
In response to shifting employment patterns todayrsquos younger employees expect from their workplace Certainly a majority
employees are less loyal to their employers than older workers favor workplace retirement plans with 61 believing that these
Fully 39 of 20-29 year olds are planning to look for a new job should be a fundamental part of pay (although this is lower
in the next 12 months compared to 29 of all workers and than for employees overall) and just 4 feel that retirement
31 frequently think about quitting their jobs Strikingly while planning should be left entirely to individuals
53 of all workers plan to stay with their current employer
until retirement just 37 of 20-29 year olds say this However there is evidence of a slight shift in perceptions
Younger workers are less likely to want workplace retirement
Doubtless much of this is because younger workers are more plans over other factors Of those who want employer
mobile and have more opportunities Another trigger to lower retirement plan contributions only 46 wanted this even if
employer loyalty may be the expectation of holding more jobs it reduced benefits and 35 (compared to 43 of all workers)
and even pursuing multiple careers over a working lifetime if it cut jobs
The Young Pragmatic and Penniless Generation | 22
Donrsquot know Employers should be
required to contribute to workersrsquo pensions
5 Nothing ndash it should be left to the government to take 18
care of its citizens 28
4 Nothing ndash it should be left to individual employees to
take care of themselves
13
22
Employers should provide a range of flexible benefits
and allow individuals to choose which benefits they
actually want
10 Employers should
be required to make a pension available but not
to contribute into it
Employers should not be required to provide pensions but should
provide information on how to plan for retirement
Chart 16 Most young workers feel that their employer should provide some kind of pension Q In the future what if anything should employers do to help people plan for retirement
Base 20-29 year olds
Are other workplace benefits more important Younger workers were asked to rate the importance of various workplace benefits The results reveal how highly they value the
elements of their compensation package Chart 17 shows that 87 of young employees believe a workplace retirement plan with
employer contributions would be an important factor when choosing their next job While retirement may be decades away for
twentysomethings 80 believe programs provide for a phased retirement are important
23 | The Young Pragmatic and Penniless Generation
Basic salary 94
93 Holiday entitlement
91 Overtime and bonus pay
91 Location of workplace
88 Medical health insurance
87 Opportunities for career progression
Access to a workplace retirement plan with employer contributions 87
Access to good training provision 86
Flexible working hours 85
Life insurance (death in service benefits) 81
Phased retirement or other employer programs providing for a transition into retirement 80
Ability to work past the normal retirement age 70
Access to a workplace retirement plan without employer contributions
67
Employee stock plans 65
Access to creche help with the cost of childcare 59
Opportunities for foreign travel 50
Company car 43
Chart 17 Workplace retirement plans are a relatively low priority for younger workers when choosing a job How important to you would the following workplace benefits be if you were choosing your next job
ase 20-29 year olds
Q
B
Regarding workplace benefits provided by employers today considered just enough to fulfill basic needs and in China a
young employees are about as likely as all workers to be offered fully formed nationwide retirement system is still some way off
retirement tools such as annual plan statements and online The future shape and affordability of these plans is debated in
tools from their employer though it is concerning that 24 do all of the sur vey countries to var ying degrees
not know if such tools are available or not Those provided are
considered helpful Younger workersrsquo views on reform are important because
changes to government retirement benefits are more likely
The role of government to affect them than any other part of the working population
The generosity of government retirement benefits varies The main concern cited by 57 is of facing less generous
considerably in the countries sur veyed In some countries such government retirement benefits than those enjoyed by their
as France government benefits are the primar y mechanism parentsrsquo generation
for funding retirement while in the United Kingdom they are
The Young Pragmatic and Penniless Generation | 24
The government should reduce the overall cost of state pension provision by
reducing the value of Donrsquot know individual pension plans
25 22
4 The government should not do anything State pension provision will
remain perfectly affordable in the future
28
21 The government should increase overall funding
available for the state pension through
raising taxes
The government should take a balanced approach with some reductions in individual payments and
some increases in tax
Chart 18 Young workers think that the government retirement system will need to be reformed Q With the cost of government retirement benefits becoming a greater concern as people live longer which
if any of the following do you think the government should undertake
Base 20-29 year olds
The younger generation believes that the government cannot What do young employees look for in a retirement product continue to provide as it does now ndash just 4 think government The sur vey findings show that young employees have
benefits will remain affordable to society However there is no reser vations about employer and government retirement
consensus on what governments should do to reform retirement benefits So what then do they want from a private savings
plan systems Over a fifth (22) think retirement entitlements product The savings product feature most valued by younger
should be cut just over a fifth (21) think governments should workers is protection against investment risk (Char t 19)
raise taxes and more than a quarter (28) think a mixture of This may be in the form of no loss of initial investment a
the two is the best solution Another quarter admits that they guaranteed income stream or protection against inflation
donrsquot know what should be done This is reasonable ndash the initial investment of those farthest
from retirement is most at risk However less consideration
is given to savings grow th through investment returns This
suggests that there is an oppor tunity to educate young
workers about the trade-off between returns and risk
management and what they stand to gain
25 | The Young Pragmatic and Penniless Generation
Chart 19 Products which protect against investment risk are the most important to young workers ( interested) Q Thinking about the types of financial products you could purchase to help provide you with security in retirement on a scale of 1 to 5
how interested are you in the following options
Base 20-29 year olds
A product providing a guaranteed retirement income stream or lifetime income in retirement 82
A product which protects my retirement income against inflation 81
A product which guarantees that I donrsquot lose my initial investment 81
A product which helps meet the cost of long-term care if I become unable to look after myself 80
A product which protects my capital from poor investment returns 79
A product which generates a retirement income and allows me to take a lump sum from the investment should I need to 79
A product where the annual management charges are kept low 78
A product which enables me to keep some control over how my savings are invested during my retirement 77
A product which manages the asset allocation so that I am never exposed to a level of risk Irsquom not comfortable with 76
A product which continues to provide a retirement income to my spouse in the event that I die first 75
A product which protects my family against having to pay estate taxes when I die 72
A product which locks in investment returns during the good years 70
The lsquodefined ambitionrsquo retirement system in This removes some of the disadvantages of leaving
the Netherlands a sustainable retirement solution retirement liabilities exclusively up to employers
for young workers (defined benefit) or employees (defined contribution)
In the Netherlands as elsewhere young workers are faced In the Netherlands this is likely to involve legislation which
with an increasing retirement age decreasing government lets retirement funds automatically adjust pay-outs and
suppor t for retirement and declining traditional defined retirement age as life expectancy changes xii
benefit employer retirement plans Reforms proposed
by the Dutch may show a way for ward for all mature and This model has garnered interest elsewhere In the
aging economies United Kingdom Pensions Minister Steve Webb expressed
interest on a more limited scale with a government
rsquoDefined ambitionrsquo proposes that risks are not taken on fully guarantee for a minimum rate of return for defined
by either employer or employee but are shared contribution retirement plans
The Young Pragmatic and Penniless Generation | 26
Recommendations Enabling young workers to save The studyrsquos findings reveal that the majority of young workers (66) are either saving consistently or aspire to start saving but face challenges including debt low pay and funding for significant life events and generational changes to the economic landscape and government and employer support If young people are to achieve a prosperous retirement their willingness to save should be met with better opportunities to save Here is what can be done by employers governments and young people themselves to address retirement planning concerns for younger adults
27 | The Young Pragmatic and Penniless Generation
Individuals Employers and governments
Determine how much income you need in retirement Auto-enroll employees into a workplace retirement plan Young people accept the need to save for retirement but donrsquot If an auto-enrollment workplace retirement plan is feasible
know how to act on that need They can become more retirement this can play a major role in getting young workers saving early
savvy simply by talking to friends and family (as do 24 of and regularly Combined with auto-escalation (the automatic
our respondents already) or employers going online to use annual increase in retirement plan contributions) and matching
retirement calculators or reading the personal finance media contributions it can lead to greater retirement readiness
Seek out a financial advisor Provide more flexible savings products through the workplace Young people are faced with life events that make it easy to Not all savings journeys start with a retirement plan particularly
feel overwhelmed by financial priorities in addition to retirement for young people who may think of retirement as lsquotoo far awayrsquo
planning Soliciting advice from a finance professional early in Employers can kick-start the savings habit in younger workers
life (17 of young employees have done so already) helps with by providing flexible easy to access and easy to understand
planning and priorities and making sense of long-term finances savings plans as a more attractive starter option
Start saving now and save consistently Make company retirement plans more portable As with all employees young people will strengthen their Young people move jobs much more often than previous
retirement readiness simply by saving regularly Today only 25 generations of employees so savings like DC retirement plans
of young people always save yet even small regular amounts need to follow employees when they change jobs
will improve retirement readiness over time
Make tax incentives more effective Ask your employer about workplace retirement savings plans All countries encourage long-term savings through tax relief but
and other retirement benefits young people often arenrsquot aware of this or donrsquot understand it
While one third (33) of young people believe that a workplace A more targeted system of tax relief could help provide clearer
retirement savings plan provides a major opportunity to start and simpler signals to younger people about the financial
saving employers often experience difficulties in engaging benefits of long-term saving
younger employees in discussions about retirement planning
The workplace is an important channel for achieving retirement Make better financial education central to the workplace readiness so be sure to max out on any employer contributions retirement offer
Young people who aspire to save may be prevented from
doing so by setting the wrong financial priorities Workplace
retirement education ndash alongside professional advice ndash can help
guide young people toward the right long-term priorities at an
earlier age in life
The Young Pragmatic and Penniless Generation | 28
29 | The Young Pragmatic and Penniless Generation
Glossary
Aegon Retirement Readiness Index (ARRI) c areer average retirement plan The ARRI assesses the relative levels of retirement A type of defined benefit plan that is based on an
preparedness of employees across different countries on a employeersquos average retirement earnings over the duration
scale from 1 to 10 The Index is based on three questions of plan membership Same as average salary plan
covering attitudes and three questions covering behaviors
defined ambition (DA) plan average salary plan A type of retirement plan in which retirement plan risks
A type of defined benefit plan that is based on an are shared between the employer and the employee
employeersquos average retirement earnings over the duration It offers greater certainty to savers around the final value
of plan membership Same as career average plan of their retirement assets than in DC plans and less
cost volatility for employers than with DB plans In the
a nnuity Netherlands Defined Ambition (DA) retirement plans are
A form of contract sold by life insurance companies that being introduced in order to help relieve the pressure on
guarantees a fixed or variable payment to the annuitant employers while still trying to provide employees with a
at some future time usually retirement All capital in the more secure retirement plan The United Kingdom too is
annuity grows tax-deferred looking at DA retirement plans as a solution
auto enrollment defined benefit (DB) plan An employer-sponsored retirement plan in which the An employer-sponsored retirement plan where the amount
employer is able to enroll an employee without that of future benefits an employee will receive from the plan is
employeersquos express authorization The employer determines defined typically by a formula based on salary history and
what percentage of the employeersquos salary or wages is years of service The amount of contributions the employer
contributed to the plan The employee is able to change is required to make will depend on the investment returns
this percentage and can opt out of enrollment in the plan experienced by the plan and the benefits promised
Contrast defined contribution plan
a uto-escalation A feature of a plan which automatically increases the defined contribution (DC) plan percentage of (retirement) funds saved from salary An employer-sponsored retirement plan such as a 401(k)
This feature generally uses a default or standard plan or a 403(b) plan in the United States in which
contribution escalation rate contributions are made to individual participant accounts
Depending on the type of DC plan contributions may be
B aby Boomers made by the employee the employer or both
A term used to refer to people generally born between
the end of World War II in 1945 and the mid 1960s The employeersquos benefits at retirement or termination of
Other generations Silent Generation - the generation born employment are based on the employee and employer
between 1925 and 1945 Generation X - the generation contributions and earnings and losses on those
born between 1965 and 1979 Millennials or Generation contributions See also 401(k) and 403(b) plan
Y - the generation born between 1980 and 2000 and often Contrast defined benefit plan
classified as the children of Baby Boomers
The Young Pragmatic and Penniless Generation | 30
401(k) plan An employer sponsored retirement plan that enables
employees to make tax-deferred contributions from their
salaries to the plan
403(b) plan An employer-sponsored defined contribution plan that
enables employees of universities public schools and
non-profit organizations to make tax-deferred contributions
from their salaries to the plan
final salary plan A type of defined benefit plan in which retirement
benefits are based on final retirement salary in the years
immediately before retirement benefits are received
Millennials A term used to refer to the people born from about 1980
to 2000 brought up using digital technology They are
often classified as the children of Baby Boomers
r etirement (or pension) plan Provides replacement for salary when a person is no
longer working due to retirement In the case of a defined
benefit retirement plan the employer or union contributes
to the plan which pays a predetermined benefit for the
rest of the employeersquos life based on length of service and
salary Payments may be made either directly or through
an annuity Retirement plan payments are taxable income
to recipients in the year received The employer or union
has fiduciary responsibility to invest the retirement plan
funds in stocks bonds real estate and other assets earn
a satisfactory rate of return and make payments to retired
workers Retirement plan funds holding trillions of dollars
are one of the largest investment forces in the stock
bond and real estate markets If the employer defaults in
the United States retirement plan payments are usually
guaranteed by the Pension Benefit Guaranty Corporation
(PBGC)
variable annuities (VA) An insurance contract in which the insurance company
guarantees a minimum payment at the end of the
accumulation period The payments may vary depending
on the financial performance of the managed portfolio
31 | The Young Pragmatic and Penniless Generation
About Aegon Transamerica Center for Retirement Studiesreg and Cicero Consulting
Aegon Transamerica Center Aegon is an international life insurance pensions and asset reg management company with businesses in over 20 markets for Retirement Studies in the Americas Europe and Asia Aegon companies employ The Transamerica Center for Retirement Studiesreg (TCRS) is
around 24000 people and serve millions of customers a division of the Transamerica Institute a nonprofit private
worldwide foundation TCRS is dedicated to educating the public on
wwwaegoncom emerging trends surrounding retirement security in the
United States TCRSrsquo research emphasizes employer-sponsored
In 2010 Aegon became a founding member of the Global retirement plans issues faced by small to mid-sized companies
Coalition on Aging which seeks to raise awareness of aging and their employees and the implications of legislative and
issues among policymakers and the general public A major aim regulatory changes Transamerica Institute is funded by
of the coalition is to transform the way we think and speak contributions from Transamerica Life Insurance Company and
about aging replacing the familiar rhetoric of lsquoproblemsrsquo with its affiliates and may receive funds from unaffiliated third-
a more positive discussion of lsquopossibilitiesrsquo and lsquoopportunitiesrsquo parties For more information about TCRS please refer to
wwwglobalcoalitiononagingcom wwwtransamericacenterorg
Cicero Consulting A leading consultancy firm serving the banking insurance and
asset management sector Cicero specializes in public policy
and communications consulting as well as global thought
leadership and independent market research Cicero was
established in 2001 and now operates from offices in London
Brussels Washington and Singapore As a market leader in
pensions and retirement research Cicero designed
and analyzed the research and contributed to the report
wwwcicero-groupcom
The Young Pragmatic and Penniless Generation | 32
Marta acebo Mark Green Patricia Plas
Paula alvarez douGlas henck scott roane
Frits bart wendel hoFMan thurstan robinson
Grace basile
lynette belFry
andrew berwick
Frans van der horst
tatsuo kai
herMan kaPPelle
Patti rowey
sarah russell
Joost van schaGen
robin boon Gaacutebor kePecs dick schiethart
bert-JaaP brons Marco keiM erik schouten
douG brooks
libby buet
kent callahan
JaiMe kirkPatrick
bas knol
roGer koch
anGela seyMour Jackson
kate sMith
renske stoker
Jeanne de cervens
dana chen
Peter kunkel
alexander kuiPers
eyleen sun
MartiJn tans
arkadiusz chMurzynski
heidi cho
brian lewis
Mike linder
GreG tucker
Mark twiGG
siMon clow siMon luke catherine wanG
robert colliGnon Jason Ma Marc van weede
catherine collinson GrzeGorz Mathea tiM willaert
wendy daniels
Michel denizot
edit drevenka
Paul Middleton
takaoh MiyaGawa
david Moulton
daniel wriGht
alex wynaendts
MacieJ zaPala
Jan driessen
kelly Fu
adrian Grace
Mark Mullin
Marcelle noltenius
stiG nybo
Peacuteter zatykoacute
vicky zeldin
Disclaimer This repor t contains general information only and does
not constitute a solicitation or offer No rights can be
derived from this repor t Aegon its par tners and any of
their affiliates or employees do not guarantee warrant
or represent the accuracy or completeness of the
information contained in the repor t
Acknowledgements
33 | The Young Pragmatic and Penniless Generation
References and notes i For a comparison of different retirement systems see lsquoPensions at a Glance 2011rsquo OECD 2011 ii As the survey was carried out online the survey results in China are based toward people living in urban areas iii ldquoPensions Marketsrdquo TheCityUK March 2013 p9 iv Global Employment Trends for Youth 2013 A generation at risk International Labour Organisation 2013 p2 v Eurostat July 2013 vi OECD Employment and Labour Markets Key Tables from OECD No 2 2012 vii The Federal Reserve Bank of New York 2012 Quarterly Report on Household Debt March 29 2013 viii World Bank ix lsquoWorld-class povertyrsquo The Economist February 27 2013
httpwwweconomistcomblogsanalects201302chinas-poor x lsquoThe Chinese slow down in char tsrsquo The Economist July 15 2013 xi lsquoChina rsquos welfare system difficult inflexible and blatantly unfairrsquo The Guardian April 23 2013
httpwwwtheguardiancomglobal-development2013apr23china-welfare-system-inflexible-unfair xii lsquo The Dutch experience with Defined Ambition pensions and the impact on companiesrsquo Aegon Global Pensions March 12 2013
httpwwwaegonglobalpensionscomenHomePublicationsNews-archiveNewsThe-Dutch-experience-with-Defined
Ambition-pensions-and-what-that-may-mean-for-companies-in-the-Netherlands-and-the-UK
shy
The Young Pragmatic and Penniless Generation | 34
Contact information HE ADQUARTER S
Aegon NV
PO Box 85
2501 CB The Hague
Telephone +31 70 344 32 10
w w waegoncom
MEDIA REL ATIONS
Telephone +31 70 344 89 56
Email gcc-iraegoncom
Countr y Index score
Germany 548
China 541
Canada 524
United States 519
The Netherlands 488
United Kingdom 486
Sweden 483
France 475
Hungar y 473
Poland 463
Spain 440
Japan 430
Total 489
Appendix 1 Aegon Retirement Readiness Index (ARRI) - technical note
Aegon Retirement Readiness Index (ARRI)-technical note 2013 Weightings (2012 in brackets) A sample of 12000 pre and post retirees was drawn from 1 Personal responsibilit y 20 (30)
twelve countries Of these 10800 (90) were pre-retirees 2 Level of awareness 30 (35)
and these were chosen for fur ther analysis of their plans 3 Financial capability Understanding 30 (25)
for retirement The Index that was developed forms an 4 Retirement planning 50 (50)
assessment of how well an individual perceives the adequacy 5 Financial preparedness 60 (60)
of his her own finances and financial awareness specifically 6 Income replacement 35 (35)
for addressing his retirement needs
Note that the weights devised to show the relative
The lsquotargetrsquo for the Index impor tance of each question in calculating the Index add to
The question on current savings activity was designated as the 225 These were then re-scaled so that a final scale of 1 to
target question (dependent variable) for predicting the level of 10 was calculated
preparedness for retirement Responses to this question were
then correlated with each of the six key questions (variables) Final scores by country below to understand which were driving the activity These weightings were multiplied by the actual scores for each
This was done because it was not felt to be correct to give respondent for each of the six Index questions and aggregated
each of the six variables described below an equal weight as to obtain a provisional score This was then adjusted to
they appeared to have quite different relationships to the give countr y scores out of 1 to 10 (A score of 1 to 10 had
target question sufficient differentiation to be used as the scale for analysis)
1 Personal responsibilit y for income in retirement
2 Level of awareness of need to plan for retirement
3 F inancial capability Understanding of financial matters
regarding plans for retirement
4 Retirement planning Level of development of plans
5 Financial preparedness for retirement
6 Income replacement Level of projected income replacement
The weighting To estimate the statistical significance of the decline in overall
scores in this yearrsquos Index is theoretically incalculable
Two things have changed from 2012 to 2013
1 C anada and China have joined the sample
2 The new countries have thus influenced the weights of
emphasis placed on the 6 variables used to calculate
the score hence the weights attached to the complex
calculation have changed
However it is noticeable that for countries which were sampled
in both time periods the mean scores for the six individual
variables have almost invariably declined and on average more
than half of them have shown a significant level of decline
In particular the question lsquoDo you think you will achieve this
incomersquo has for all countries shown a significant level of
decline We thus hypothesize that the comparative results
show a significant decline
The Young Pragmatic and Penniless Generation | 36
Net
herl
ands
Net
herl
ands
Net
herl
ands
Ger
man
yG
erm
any
Ger
man
yBase 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
Better off 7 4 23 Sw
eden
Swed
en11 5 7 8 3 11 14 50 5
Swed
en
About the same 19 18 27 23 8 19 18 13 29 29 24 21 U
ntie
dU
ntie
dU
nite
d Worse off 66 74 41 58 79 69 71 76 51 47 21 55
Kin
gdom
Kin
gdom
Kin
gdom
Donrsquot know 9 3 9 9 9 4 4 8 9 10 6 19
Fran
ceFr
ance
Fran
ce
Chart 2 Education of 20 ndash 29 year olds by country Q Please choose from the following list the highest level of educational or professional qualification you have
Spai
nSp
ain
Spa
in
Pol
and
Pol
and
Pol
and
Hun
gary
Hun
gary
Hun
gar y
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
dU
nite
d 100 100 100 100 100 100 100 100 100
Stat
es100 100 100
Stat
esSt
ates
Less than high school graduate 2 44 6 14 1 3 2 7 1 3 Ca
nada
Cana
daC
anad
aHigh school graduate 11 33 53 23 22 22 4 41 14 21 1 2
Some college or trade school 46 2 9 9 9 19 37 14 28 20 4 33 Ch
ina
Chin
aC
hina
College degree University degree 31 15 27 30 41 43 21 33 50 46 9 57
Postgraduate degree or 8 3 3 23 25 11 36 1 8 9 80 6 qualification Ja
pan
Japa
n Ja
pan
Other 2 4 1 1 1 2 0 5 0 6 2
None 0 1 1 0 1 0 0
NET Less than undergrad degree 61 82 70 47 34 46 43 66 42 45 11 37
NET Undergrad degree or higher 39 18 30 53 66 54 57 34 58 55 89 63
Chart 3 Aegon Retirement Readiness Index scores for young employees by country
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
NET Low Index (0-5) 80 64 79 81 85 78 81 73 65 61 61 87
NET Medium Index (6-7) 15 30 18 15 14 21 17 23 25 31 31 12
NET High Index (8-10) 4 6 3 3 1 2 2 4 10 8 7 1
Appendix 2 Country comparisons Chart 1 The majority of young employees believe that they will be worse off in retirement compared to their parents Q Do you think that future generations of retirees will be better off or worse off than those currently in retirement
37 | The Young Pragmatic and Penniless Generation
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsI always make sure that 27 34 27 26 17 14 19 22 35 33 32 20 I am saving for retirement
I only save for retirement G
erm
any
Ger
man
y21 27 20 13 17 21 16 6 17 24 20 24 occasionally from time to time
I am not saving for retirement now 6 11 8 11 5 15 9 4 10 8 9 5 although I have in the past Sw
eden
Swed
en
I am not saving for retirement 35 23 34 46 53 40 49 54 36 33 38 46 though I do intend to U
nite
dU
ntie
dK
ingd
omK
ingd
om I have never saved for retirement and 11 6 10 5 8 10 6 13 3 2 1 6 donrsquot intend to
Fran
ceFr
ance
Chart 5 Younger people are more likely not to be using any means of retirement savings Sp
ain
Spai
nQ Which financial means if any are you currently using to prepare for your retirement
Pol
and
Pol
and
only asked in Germany only asked in Spain
Hun
gary
Hun
gary
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
dSt
ates
Stat
es100 100 100 100 100 100 100 100 100 100 100 100
Defined benefit plan 16 10 25 29 15 3 76 11 20 13 5 Ca
nada
Cana
daDefined contribution plan 28 10 17 19 19 14 10 23 40 7 3
Private pension 8 18 14 10 5 9 4 13 12 40 66 4 Ch
ina
Chin
a Government pension social security 12 43 14 21 8 7 4 18 27 33 71 35
Stocks 5 12 14 7 4 17 7 2 13 10 23 9
Bonds 1 8 5 6 2 16 4 2 8 13 14 3 Ja
pan
Japa
n
Mutual funds 2 14 23 4 2 10 3 4 7 16 9 6
Investment insurances (annuities) 2 3 2 3 2 9 4 5 2 4 6 1
Savings accounts 23 37 38 25 23 6 29 15 36 37 65 36
Investment property 2 10 6 7 9 2 5 2 5 11 18 1
Employee stock purchase 1 1 1 4 1 29 0 4 1 7 1
My home 10 5 8 7 7 8 4 6 6 14 30 1
Reverse mortgage 1 4 2 4
My business 2 1 3 2 2 4 1 1 2 4 12 1
Inheritance 3 11 7 11 7 9 9 8 7 9 6 2
Annuities 1 15 2 2 1 4 3 2 1 2 8
Long-term care insurance 2 1 3 2 9 5 1 6 4 7 1
Life insurance 6 11 8 8 14 3 18 15 19 18 36 17
Unterstuumltzungskasse aus 2 Eigenmitteln finanziert
Unterstuumltzungskasse vom 2 Arbeitgeber finanziert
Chart 4 Younger employees are much more likely to aspire to save for retirement Which of the following best explains your approach to saving for retirement This can include money you contribute to any long-term
investment including pensions stocks and shares investment-linked insurances property etc
Q
The Young Pragmatic and Penniless Generation | 38
Plan de empleo mixto 2 (combinacioacuten de las dos anteriores)
Other 1 6 4 0 1 2 2 3 2 2 3 3
None nothing 8 14 12 23 25 31 6 27 21 17 3 24
Donrsquot know 29 6 17 13 19 8 4 9 7 7 0 9
hart 6 The younger generation has more negative associations of retirement Which if any of the following words do you most associate with retirement
Net
herl
ands
Net
herl
ands
Ger
man
yG
erm
any
Swed
enSw
eden
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
d100 100 100 100 100 100 100 100 100 100 100 100
Kin
gdom
Kin
gdom
Freedom 35 32 36 39 19 26 11 20 35 40 37 33
Opportunity 7 27 25 18 4 8 9 10 17 16 9 16 Fr
ance
Fran
ceLeisure 58 48 36 41 23 24 43 32 50 50 55 6
Excitement 2 5 3 8 2 6 1 2 17 17 4 3 Sp
ain
Spai
nPoverty 11 26 23 11 26 14 37 44 7 5 6 20
Insecurity 34 24 18 16 20 18 35 56 10 9 18 44 P
olan
dP
olan
dLoneliness 4 10 17 16 12 7 11 8 5 9 20 12
Ill health 2 19 7 14 15 9 49 23 6 6 29 11 H
unga
ryH
unga
ryDependent on others 11 11 5 18 14 8 18 19 14 6 11 4
Tired 3 4 8 10 14 10 17 6 7 7 13 19 U
nite
dU
nite
dFar away 38 19 25 21 61 32 2 13 33
Stat
es33 14 22
Stat
es
Boredom 14 16 6 12 16 12 15 8 12 12 16 17 Ca
nada
Cana
daEnjoyment 21 16 17 23 14 29 5 3 37 37 35 15
None of the above 0 1 1 2 0 2 1 1 2 2 1 2
Donrsquot know 2 2 3 3 2 2 1 2 0 Ch
ina
6 Ch
ina
hart 7 Many young employees think they are not on course to achieve target retirement income Ja
pan
Japa
n Do you think you will achieve this income [your estimated income needed in retirement]
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
I donrsquot know if I am on course to 56 37 57 59 50 39 49 48 48 41 22 68 achieve my retirement income
No I am on course to achieve around one-quarter (25) of my 10 14 9 13 15 14 14 13 10 10 10 7 retirement income
No I am on course to achieve around 12 20 14 11 19 19 18 15 12 11 23 12 half of my retirement income
No I am on course to achieve around three-quarters (75) of my 8 14 7 4 8 15 9 8 6 11 20 5 retirement income
Yes I am on course to achieve my 15 15 13 14 8 13 11 17 25 27 25 8 retirement income
CQ
CQ
39 | The Young Pragmatic and Penniless Generation
Chart 8 Young people in most countries expect to retire before 65 Q At what age do you expect to retire from all paid employment
Net
herl
ands
Ger
man
y
Swed
en
Uni
ted
Kin
gdom
Fran
ce
Spai
n
Pol
and
Hun
gary
Uni
ted
Stat
es
Cana
da
Chin
a
Japa
n
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
40 or under 0 1 1 0 0 1 3 1 5 12
41-50 1 2 3 5 2 2 6 3 9 4 37 9
51-59 4 4 4 6 2 4 11 5 7 10 30 1
60 5 11 8 12 10 13 19 12 12 16 21 27
61-64 2 11 10 2 20 7 4 13 5 3 1 2
65 17 22 44 31 34 32 16 26 26 32 3 25
66-69 42 32 15 9 12 29 20 13 9 9 0 1
70 19 11 10 18 10 5 10 9 13 12 0 6
71+ 5 5 5 9 4 5 5 3 7 5 1 4
Never 2 1 1 2 2 2 6 4 1 0 0
Donrsquot know 2 3 2 5 3 2 8 9 5 5 1 13
Mean 67 65 65 65 64 65 63 64 63 64 53 59
Median 67 65 65 65 65 65 65 65 65 65 55 60
Chart 9 Younger employees feel they donrsquot have money to invest for retirement Q What is the single biggest obstacle to you saving for retirement right now
Net
herl
ands
Ger
man
y
Swed
en
Uni
ted
Kin
gdom
Fran
ce
Spai
n
Pol
and
Hun
gary
Uni
ted
Stat
es
Cana
da
Chin
a
Japa
n
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
The uncertain economic environment 19 8 13 9 13 19 11 14 12 9 29 27
Lack of money to invest 28 41 33 43 47 34 48 55 47 50 6 19
Fear of poor investment returns over the coming years 2 5 10 7 5 6 8 2 6 8 14 6
Complexity of investment products 4 4 4 3 5 3 5 2 12 5
I donrsquot know how to go about investing for the long-term 2 3 10 8 5 5 3 3 6 8 7 9
The fees charged by financial services companies 2 4 4 2 4 3 4 2 3 5 2 5
I canrsquot afford to take financial advice 3 3 6 8 2 4 3 5 3 2 3 2
I donrsquot trust the financial services industry 12 11 8 6 5 10 6 2 2 3 5 4
I donrsquot see the need to save for the long-term 6 1 2 2 3 3 3 1 2 1 4 3
Concerns about unstable currencies currency fluctuations 2 5 1 3 3 3 4 3 4 5 15 2
Other (PLEASE STATE) 3 3 1 1 3 2 4 6 2 2 1
Donrsquot know 17 12 11 7 8 6 3 6 8 6 3 17
The Young Pragmatic and Penniless Generation | 40
Chart 10 More money would incentivize young employees to save for retirement Q Which if any of the following would encourage you to save for retirement
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsMore generous tax breaks on long-term savings and pensions 20 44 30 32 27 23 42 42 33 43 40 32 products
Ger
man
yG
erm
any
Access to financial education so that I am more aware of what 24 6 14 21 16 22 21 12 23 24 43 25 I need to do for myself
Swed
enSw
eden
Access to professional financial advice so that I have personalized
Uni
ted
20 24 23 23 15 21 25 9 22 23 44 13 U
nite
drecommendations on what steps
Kin
gdom
Kin
gdom
I need to take
Simpler investment products that 12 33 19 28 20 Fr
ance
18 27 16 32 28 36 10 Fr
ance
I can understand with less jargon
Better and more frequent information about my retirement 16 28 20 27 27 23
Spai
n20 18 25 31 45 22
Spai
nsavings
Better legal protection in case I am 12 18 13 18 10 24 18 13 13 19 21 6 P
olan
dP
olan
dsold the wrong product
A pay rise 46 54 44 64 55 50 70 72 67 64 53 37
A better retirement plan pension H
unga
ryH
unga
ry27 32 25 33 29 26 42 35 39 44 33 32 match from my employer
Other 4 2 1 1 2 2 3 3 2 U
nite
d3 0
Uni
ted
Stat
esSt
ates
Donrsquot know 17 9 16 10 10 12 3 8 8 5 3 17
Not applicable - I already have 3 3 4 2 2 1 1 1 2 2 3 sufficient savings Ca
nada
Cana
da
Chin
aCh
ina
Chart 11 A majority of younger employees do not have a written plan for retirement Q Which of the following best describes your retirement planning strategy
Japa
n Ja
pan
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
I have a written plan 7 18 10 9 6 8 6 5 13 10 8 4
I have a plan but it is not written 24 47 37 25 23 31 29 31 37 44 55 24
down
I do not have a plan 61 32 51 61 62 55 62 58 45 42 34 61
Donrsquot know 7 3 3 5 8 6 3 6 4 4 3 12
41 | The Young Pragmatic and Penniless Generation
Chart 12 For young employees friends and family are the leading source of retirement savings information Q And which of these sources (of information) is most important to you
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
Bank adviser 6 11 19 5 25 5 7 4 3 17 10 2 N
ethe
rlan
dsN
ethe
rlan
dsProfessional financial adviser 12 22 10 12 10 19 19 22 21 25 19 10
Insurance agent spokesperson 3 10 2 3 1 3 6 2 3 0 3 2 G
erm
any
Ger
man
yInsurance company website 3 1 3 2 4 4 2 2 1 3 1
Personal finance websites online 8 5 7 8 5 4 10 8 12 6 10 8 retirement planning tools Sw
eden
Swed
enPersonal finance media 2 2 2 2 2 6 3 1 2 1 6 2
Government website 7 1 3 6 U
nite
d5 2 3 3 2 3 7 1
Uni
ted
Kin
gdom
Kin
gdom
Bank website 2 3 3 2 1 0 3 2 1 6 3 3
My employer 12 8 4 9 4 7 5 12 8 5 4 1 Fr
ance
Fran
ceAccountant 2 6 4 4 1 3 1 3 5 5 1 3
Lawyer 2 3 1 2 2 8 4 2 1 2 2 0 Sp
ain
Spai
nFriends and family 21 22 30 28 24 26 18 24 26 20 25 24
None of these P
olan
dP
olan
dNot applicable 21 7 16 18 19 13 17 15 14 9 5 41
Hun
gary
Hun
gary
Chart 13 Most young workers feel their employer should provide some kind of pension Q In the future what if anything should employers do to help people plan for retirement
Uni
ted
Uni
ted
Stat
esSt
ates
Cana
daCa
nada
Chin
aCh
ina
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 Ja
pan
Japa
n Employers should be required to 24 43 20 40 21 26 20 28 37 34 20 30 contribute to workersrsquo pensions
Employers should be required to make a pension available but not to 12 13 7 17 20 15 15 4 11 14 22 5 contribute into it
Employers should not be required to provide pensions but should 15 9 12 8 9 8 11 6 11 9 9 11 provide information on how to plan for retirement
Employers should provide a range of flexible benefits and 13 18 18 16 15 27 25 28 21 22 45 12 allow individuals to choose which benefits they actually want
Nothing ndash it should be left to individual employees to take care 2 2 5 1 4 3 3 5 6 5 1 9 of themselves
Nothing ndash it should be left to the government to take care of its 2 5 5 2 5 8 15 14 1 4 0 4 citizens
Donrsquot know 30 10 32 17 27 12 12 15 13 13 3 29
The Young Pragmatic and Penniless Generation | 42
Chart 14 Workplace pensions are relatively low down in young workersrsquo priorities when choosing a job Q How important to you would the following workplace benefits be if you were choosing your next job
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsBasic salary 86 93 88 91 88 92 90 94 90 93 96 94
Holiday entitlement 87 94 89 91 92 94 91 94 93 94 96 91 G
erm
any
Ger
man
yOvertime and bonus pay 86 93 87 88 89 90 89 94 90 91 97 90
Location of workplace 88 91 86 92 89 90 89 92 93 93 92 86 Sw
eden
Swed
enMedical health insurance 73 92 84 65 86 87 88 87 93 94 98 83
Opportunities for career progression 86 91 81 90 90 94 91 94 92 91 96 81 U
nite
dU
nite
dAccess to a workplace retirement 85 85 81 82
Kin
gdom
78 84 80 78 84 86 93 74 K
ingd
omplan with employer contributions
Access to good training provision 85 87 85 88 86 91 85 93 86 90 95 74 Fr
ance
Fran
ceFlexible working hours 79 87 58 86 81 89 81 87 91 91 92 57
Life insurance 72 75 79 69 80 82 Sp
ain
84 80 81 88 93 74 Sp
ain
(death in service benefits)
Phased retirement or other employer programs providing for 74 54 75 71 72 81 76 74 76 81 91 65
Pol
and
Pol
and
a transition into retirement
Ability to work past the normal 68 57 64 65 64 74 72 65 74 76 80 70 retirement age H
unga
ryH
unga
ry
Access to a workplace retirement 62 74 61 68 59 77 61 47 68 74 89 65 plan without employer contributions U
nite
dU
nite
dSt
ates
Stat
esEmployee share plans 50 72 54 65 59 73 61 51 64 73 91 55
Access to creche help with the 67 75 64 56 69 79 75 83 58 69 89 68 cost of childcare Ca
nada
Cana
da
Opportunities for foreign travel 53 54 60 55 50 71 58 66 57 61 79 37
Company car 51 46 45 47 49 63 51 49 36 49 69 Ch
ina
39 Ch
ina
Japa
n Ja
pan
Chart 15 Young workers think the state pension will need to be reformed Q With the cost of government pensions becoming a greater concern as people live longer which if any of the following do you think
the government should undertake
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
The government should reduce the overall cost of state pension 15 33 16 15 16 20 28 22 21 26 30 16 provision by reducing the value of individual pension plans
The government should increase overall funding available for the 12 21 30 22 14 34 19 26 21 18 29 10 state pension through raising taxes
43 | The Young Pragmatic and Penniless Generation
he government should take a alanced approach with some 27 26 12 30 28 23 24 16 34 31 38 41 eductions in individual payments nd some increases in tax
he government should not do nything State pension provision 7 2 12 5 3 4 3 3 5 4 0 5 ill remain perfectly affordable in he future
onrsquot know 38 19 29 29 39 20 26 34 19 21 4 28
Net
herl
ands
art 16 Products which protect against investment risk are the most important to young workers ( interested) Thinking about the types of financial products you could purchase to help provide you with security in retirement on a scale of 1 to 5
how interested are you in the following options G
erm
any
Swed
en
Uni
ted
Kin
gdom
ase 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 Fr
ance
100 100 100 100 100 100 100 100 100 100 100 100
product providing a guaranteed etirement income stream or 75 81 73 76 74 83 78 76 87 85 94 69
Spai
nifetime income in retirement
product which protects my 74 79 73 76 72 82 77 74 84 86 94 65 etirement income against inflation P
olan
d
product which guarantees that I 72 82 73 78 75 81 76 73 86 86 90 67 onrsquot lose my initial investment H
unga
ry product which helps meet the ost of long-term care if I become 74 79 74 77 70 79 76 71 86 85 84 66
Uni
ted
nable to look after myself St
ates
product which protects my capital 71 81 71 76 68 76 77 73 84 83 93 65 rom poor investment returns Ca
nada
product which generates a etirement income and allows 69 78 71 75 68 81 77 72 84 86 94 70 e to take a lump sum from the
Chin
anvestment should I need to
product where the annual 66 78 68 75 72 79 77 70 85 86 87 64 anagement charges are kept low Ja
pan
product which enables me to eep some control over how my 71 73 70 75 72 80 75 69 88 85 91 63 avings are invested during my etirement
product which manages the sset allocation so that I am never 68 70 67 73 66 76 71 67 80 83 95 60 xposed to a level of risk Irsquom not omfortable with
product which continues to rovide a retirement income to my 74 78 71 75 73 81 79 73 86 82 94 60 pouse in the event that I die first
product which protects my family gainst having to pay estate taxes 73 76 71 74 75 81 75 69 82 82 89 56 hen I die
product which locks in investment 72 71 63 73 64 71 59 56 81 84 89 61 eturns during the good years
Tbra
Tawt
D
ChQ
B
Arl
Ar
Ad
Acu
Af
Armi
Am
Aksr
Aaec
Aps
Aaw
Ar
The Young Pragmatic and Penniless Generation | 44
Opportunities and obstacles Young employees are realists in a changing world This changing world presents young people with many Working adults between the ages of 20 and 29 expect to
opportunities but also with uncertainties and obstacles which be worse off financially in retirement than their parents (59)
impact their financial planning and long-term financial security and take on more financial responsibility including funding their
Cast-iron government and employer retirement benefits are own retirement Additionally 37 believe that they will likely
less prevalent than before and have given way to a more fall short of their retirement needs Furthermore 27 believe
individualistic approach based on personal responsibility that their retirement shortfall will be large at least half of what
In an uncertain labor market employment is less secure Todayrsquos they estimate they will need in retirement As a result 44 are
employees switch employers take career breaks and undertake pessimistic that they will not be able to choose when to retire
periods of self-employment or contract work A steady salary a luxury enjoyed by many of their parents Another factor is the
progression has become the exception rather than the rule financial impact of caring for the older generation with 28
Major life goals such as education funding and home ownership expecting to provide financial support for retired parents
are more costly and harder to achieve than in previous and 40 agreeing that lsquoadult children of retirees should
generations and also compete with retirement funds In this help provide financial support for their parents if neededrsquo
new reality there is a clear role for employers and retirement
providers supported by government to embrace young Forecasts support such pragmatism Today the average
employeesrsquo willingness to take control of their financial future retirement age is around 63 years but by 2050 when those
in their twenties today will be entering retirement the official
Key findings retirement age of many countries will be an average of
The Changing Face of Retirement The Young Pragmatic 67 to 68 years due in part to increased longevity an aging
and Penniless Generation reveals a retirement shortfall for workforce and receding government benefits In addition
employed young adults between the ages of 20 and 29 that youth unemployment is at historically high levels In Spain this
is due to a lack of opportunity to save rather than a lack of stands at 53 for 15 to 24 year olds the highest of our survey
will A range of uncertainties and obstacles some driven by life countries followed by Hungary (28) and Poland (27)
stage many generationally unique conspire to make saving for
retirement harder today than it was for older generations Young employees are ready to do what it takes to save for Young employees recognize these challenges and are prepared their retirement to take responsibility for the solution To do this they require A surprising and encouraging two-thirds of young employees are
employers retirement providers and governments to provide committed to or have the ambition to save for their retirement
suitable financial expertise knowledge and products A core 25 of young employees are habitual savers who lsquoalways
make surersquo that they are saving for retirement and a highly
encouraging 41 of young employees are lsquoaspiringrsquo savers
who intend to save Furthermore the need to save is widely
recognized ndash 57 of young employees believe that retirement
savings are important but not a priority for them at the moment
Taken together these findings suggest that many young
employees are prepared to lsquoownrsquo the retirement problem
having accepted the new reality perhaps more readily than
some older employees
3 | The Young Pragmatic and Penniless Generation
Aspiring savers unable to meet their savings goals can be Young employees can meet their retirement goals and turned into habitual savers with better educational support aspirations with access to flexible financial products which advice and information suit the life they lead The survey reveals that a significant percentage of younger Todayrsquos young employees require flexible savings products
employees (47) do not know if they are on course to achieve such as more portable retirement benefits and other workplace
their desired retirement income ndash a lack of insight into the savings offerings which move with them between employers
future which may contribute to savings inertia Addressing and across different life stages Young employeesrsquo employment
this shortfall many young employees express an interest in patterns are different to those of previous generations
financial education and advice Fully 26 say that lsquobetter and The survey revealed that 39 are planning to look for a new
more frequent information about my retirement savingsrsquo would job in the next 12 months compared to 29 of all employees
encourage them to save more for retirement 23 cite lsquoaccess and 31 of young employees are thinking about quitting their
to a professional advisor with personal recommendationsrsquo and jobs At the same time young employees place a high value
22 want lsquofinancial education so I am more aware of what I on occupational benefits with 87 believing a workplace
need to do for myselfrsquo retirement plan with employer contributions would be an
important factor when choosing their next job
Tellingly almost a quarter of young employees (24) cite
friends and family as the most important source of information These dual needs of workplace retirement plans and high levels
in choosing how to save for retirement which suggests that of labor mobility can be resolved with a more flexible range of
employers and professional financial services companies are employer benefits A third (33) of young employees would
either not providing appropriate support or are not providing be encouraged to save for retirement by matched retirement
support in a manner that is perceived to add value to these contributions from their employer Again clarity and insight are
employees Given the severe long-term repercussions themes with 24 stating that access to simpler investment
of poor retirement readiness it is essential that employers products would increase their propensity to save Finally there
and retirement companies make haste in filling this gap is a leading role for government to play through the creation of
stable long-term financial and taxation policy Among young
employees 34 stated that more generous tax breaks on
long-term savings and retirement plans would encourage
them to save
The Young Pragmatic and Penniless Generation | 4
Introduction Todayrsquos twentysomethings are young but hardly carefree At a time in life when previous generations built a career and laid the foundations for a secure future many of todayrsquos young workers face unprecedented financial challenges Student debt uncertain employment prospects high housing costs the potential support of elderly parents and receding government retirement benefits are just a few of the economic and financial uncertainties that undermine their ability to plan and save for their retirement At a time in life when savings have the longest time horizon for growth these challenges work against young workersrsquo future retirement readiness
5 | The Young Pragmatic and Penniless Generation
The structure and methodology of this report specialized public policy interventions Thus the research reflects
The Young Pragmatic and Penniless Generation polled employees views of the mainstream working population
and retirees in 12 countries Canada China France Germany
Hungary Japan the Netherlands Poland Spain Sweden the A guide to this report United Kingdom and the United States These countries were The reportrsquos conclusions and recommendations flow from an
selected on the basis of having distinctive retirement systems examination of todayrsquos young employees in the context of older
as well as varying demographic and aging trends i and retired employees
bull Par t 1 of this report explores the financial pressures that Respondents were interviewed using an online panel survey young people face from unemployment intermittent
in their native language ii in January and February of 2013 employment and extended full-time education
The sample comprised 10800 employees including 2722 people bull Par t 2 reviews the savings outlook including young employeesrsquo between the ages of 20 and 29 and 1200 retirees The 12 attitudes toward saving expectations for retirement income
countries surveyed represent employees who cumulatively have and retirement age and perceived responsibilities toward
access to around 85 of the worldrsquos private retirement assets iii parent care
(excluding government retirement benefits) bull Par t 3 examines some of the potential savings obstacles such as household economics and the income position of
Issues covered included attitudes toward retirement the individual employee and the importance of advice and
preparedness the role of government and employers in the education in altering youth perceptions of financial priorities
provision of retirement benefits and the impact of the financial bull Par t 4 explores how to encourage young people to save and crisis on attitudes to investment risk and retirement planning the role of employers in this
The survey did not include the self-employed unemployed
or long-term incapacitated since each of these groups faces The final part sets out recommendations for improving the
specific retirement planning challenges which may require retirement readiness of this important group within society
The Young Pragmatic and Penniless Generation | 6
Part 1 Young people at risk in an uncertain world As societies enjoy the benefits of longer life expectancy people will need to work harder to secure a comfortable retirement This will mean saving more during working life and a redefinition of how to approach retirement When it comes to achieving this important life goal however some groups are more at risk This report examines one such group in detail young employees at the beginning of their working life
7 | The Young Pragmatic and Penniless Generation
Countr y Median Income
lsquo(nearest 000) Married Undergrad degree or more Dependent children (any)
All 20-29 year olds $27500 25 53 25
Netherlands $37000 17 39 20
Germany $38000 33 18 27
Sweden $39000 16 30 32
United Kingdom $48000 24 53 24
France $28000 23 66 26
Spain $23000 13 54 25
Poland $13000 38 57 28
Hungary $6000 31 34 16
United States $43000 26 58 27
Canada $51000 36 55 27
China $18000 31 89 30
Japan $37000 12 63 11
Who are younger employees are also more likely than average to be single and much less
This report defines younger employees as people between likely to have children A quarter are married compared to an
20 and 29 years of age a group that belongs to the Millennials average of 64 for the generation now in their 50s
generation born between 1980 and 2000 This group differs
widely among countries although there are clear trends Education levels vary across the countries included in this research
Many have been in the labor market just a few years after a long due to differences in higher education systems (Chart 1) Overall
period of higher education Unsurprisingly median household those aged 20-29 were more likely than the average respondent
incomes are lower around $27500 according to this research to have at least an undergraduate degree The increasing
compared to an overall median of $46000 Twentysomethings prevalence of education has both positive and negative impacts
Chart 1 A portrait of younger employees Q Which of the following reflects your annual household income before taxes
Q What is your marital status
Q Please choose from the following list the highest level of educational or professional qualification you have
Q How many children do you have who are financially dependent on you Please include all children and stepchildren
Why are young people at risk Such changes will not be achieved easily in the current climate
Todayrsquos young people face a challenging set of circumstances The global financial crisis of 2007-8 not only created a need
An aging society means fewer employees supporting more for long-term structural retirement reforms it also led to the
retirees which is profoundly affecting how societies fund more immediate menace of historically high levels of youth
retirement In most of the countries surveyed lsquotraditionalrsquo unemployment The International Labour Organization (ILO)
retirement provision such as government retirement benefits estimated that in 2013 unemployment affected 73 million young
and other forms of social security or employer-sponsored people aged 15-24 worldwide representing more than 126
retirement arrangements like defined benefit company of all young people iv Across the EU 228 of people under 25
retirement plans are already subject to long-term reforms were unemployed in 2012 and in Spain the figure was 53 v
These reforms will reduce the value of future entitlements It is worth noting that the study is conducted among those who
by lowering retirement income benefits and raising the age are currently employed (part- or full-time) so the findings do not
of retirement and are likely to begin to take full effect from fully take into account the significant number of unemployed
the middle of this century just as the current generation young people
of twentysomethings enters retirement Consequently the
retirement prosperity enjoyed by todayrsquos Baby Boomers will not
be shared by subsequent retiring generations unless there is a
major change in their savings behavior
The Young Pragmatic and Penniless Generation | 8
13
4
16
3
Chart 2 Youth unemployment in 2005 and 2012 across Aegon survey countries (excluding China)
60 1
24
14
3
2005 2
06
2012
23
8
45
15
2
81
19
4
30 2
81
86
79
15 9
4
95
37
8
0 2
65
y
Japan
Spain
19
7
Canad
a
Fran
ce
Poland
Germ
any
Hunga
r
Sweden
OECD tota
l
Nether
lands
53
2
United S
tate
s
United K
ingdom
22
Note Youth unemployment rate of youth labour force (age 15 - 24) vi
23
7
12
2
21
11
3
16
2
The problems of high levels of youth unemployment and economic uncertainty affect those with jobs as well as those without
as they breed lower levels of job security and downward pressure on wages They also have a significant impact on the psychology and
confidence of younger people including those in work and their confidence in their short-term and retirement finances As the survey
findings reveal most young employees expect to find themselves worse off than their parentsrsquo generation when they enter retirement
(Chart 3)
Chart 3 The majority of young employees believe that they will be worse off in retirement compared to their parents Q Do you think that future generations of retirees will be better off or worse off than those currently in retirement
Base 20-29 year olds
Donrsquot knowBetter off
8 13
Total Respondents
2722
20 About
the same
59
Worse off
9 | The Young Pragmatic and Penniless Generation
Another major influence on the ability of young employees to save for retirement is the growth of higher education One positive
is that college graduates are more likely to benefit from lower unemployment rates fare better during economic downturns and
experience higher incomes across their lifetime supporting aspirations like home ownership vii and helping to sustain long-term
savings and increased levels of retirement preparedness (Chart 4)
Chart 4 Graduates are likely to enjoy a greater sense of retirement preparedness Q Thinking about how much you are putting aside to fund your retirement are you saving enough
Base All lsquovery prepared for retirementrsquo
30 27
17 16Postgraduate degree or qualification
College degree University degree Some college or trade school
8 High school graduate
1 Below high school graduate Other
Conversely full-time education delays entry into the labor Why is this group of young employees important arket causing a loss of several years of full-time earnings By the middle of the century todayrsquos 20-29 year olds will
otential Moreover ballooning levels of student debt may have led the world economy through an economic recovery
ignificantly delay the onset of post-graduation saving and dramatic demographic shifts during a period of greater
etween 2004 and 2012 for example student debt in the uncertainty for modern retirement systems and other issues
nited States tripled to $966 billion nationwide The effect In developing countries such as China this group will be more
f this is that todayrsquos younger employees must take greater affluent than their parents but still need to deal with the
ersonal responsibility for their savings a challenge in the consequences of a rapidly aging population and an economy
urrent economic and financial circumstances which has passed its phase of rapid growth
For all of their challenges however this group of young people
represents the biggest opportunity to change societal savings
behaviors for the better The Aegon Retirement Readiness Survey
2013 provides insights into how best to achieve this through a
greater understanding of the grouprsquos outlooks and savings habits
m
p
s
B
U
o
p
c
The Young Pragmatic and Penniless Generation | 10
45
29
20
6
50
24
21
6
56
19
21
4
46
27
21
6
Better off About the same
Worse off Donrsquot know
All work
ers
20-29 ye
ar old
s
Male 2
0-29 ye
ar old
s
Fem
ale 2
0-29 ye
ar old
s
Chinarsquos young employees bucking the gloomy trend optimistic that their economy will continue to expand over
A key finding of this yearrsquos Aegon Retirement Readiness the next 30 years Concerns about the sustainability of
Survey is that Chinese employees are far more confident growth remain however Just 37 of Chinese 20-29 year
and optimistic about their financial future than employees olds believe that the Chinese economy will improve over
in other countries This is also true of younger employees the next 12 months ndash indeed 2013 will see the economyrsquos
Of those Chinese aged 20-29 half (50) believe that they slowest expansion since 1990 x Long term Chinarsquos rapidly
will be better off in retirement than those currently in aging population makes creating a comprehensive and
retirement Younger Chinese men are the most optimistic sound retirement system an urgent priority xi Coverage has
with 56 believing that they will be better off expanded in the past 10 years with reforms such as the
introduction of the Enterprise Annuity in 2005 yet it is still
This optimism is relatively justified Since 1980 Chinese GDP not clear how China will build a universal retirement system
per capita has increased thirty-fold from $193 to $6091 across both the government-sponsored and private sectors
in 2012 viii While this dramatic increase has not benefitted However the success of reforms carried out to date suggests
all Chinese equally ndash by the Chinese governmentrsquos measure that tax incentives and efforts to improve awareness are
99 million rural Chinese live in poverty ix ndash huge progress required as part of any long term solution
has been made and young people in China are generally
Chart 5 Chinarsquos younger employees are confident of a better retirement Q Do you think that future generations of retirees will be better off or worse off than those currently in retirement
Base Respondents in China
11 | The Young Pragmatic and Penniless Generation
Part 2 The savings outlook of young employees This chapter explores the financial behaviors and savings gaps and needs of 20-29 year olds through their attitudes toward financial issues the wider economy and the savings required for a comfortable retirement
The Young Pragmatic and Penniless Generation | 12
75
21
4
69
27
4
64
31
4 5
7
36
7
20-29
30-39
40-49
50-59
44
40
16
NET Low Index (0-5)
NET Medium Index (6-7)
NET High Index (8-10)
60-69
Retirement readiness and young employees However many young employees have concerns about achieving
Retirement is seen as a major life stage by young employees this Over a third (38) are pessimistic that they will not have
They typically expect to spend an average 20 years of their lives enough to live on in retirement and 44 are pessimistic about
in retirement a definition of retirement that is consistent across being able to choose when they retire Furthermore 28 have
all working age groups Retirement conjures broadly positive made no plans at all for their retirement which may help explain
associations Fully 63 of employees in their twenties aspire some of these concerns Health worries are less of an issue with
to travel during retirement 39 see it as a period of leisure 52 being optimistic that they will enjoy good health in old age
and 30 associate it with freedom The need to plan and save although 20 believe that they will not which is perhaps related
for this phase of life is also widely accepted Half (50) of to the 17 who associate retirement with ill health in general
employees in their twenties are aware of the need to save and
64 feel a high or very high degree of personal responsibility Overall 75 of employees in their twenties achieved a low
to ensure sufficient income for retirement retirement readiness score of 0-5 on the Aegon Retirement
Readiness Index (please refer to the glossary and Appendix 1 for
an explanation of the Index) The percentage of employees with a
low score of 0-5 drops with each increase in age group and is 44
among those in the lsquoat retirementrsquo group of 60 to 69 year olds
Chart 6 Aegon Retirement Readiness Index scores for employees across age groups For more information on the ARRI see page 36
Base All aged 20 - 69
Life stage and savings attitudes Getting married and starting a family are two such events
he Retirement Readiness Index reveals that retirement Of employees in their twenties 25 are married and
reparedness is to some extent age- and life stage-related 25 have children whereas for those in their 30s 54 are
hart 6) For younger employees the idea that retirement is married and 56 have children representing a major shift
r awayrsquo combined with lower earnings and other spending toward parenthood
riorities (such as higher education or purchasing a house)
an be powerful obstacles to saving for retirement Thus while Encouragingly while young employees are less likely to
5 of all employees say that they lsquoalways make surersquo that they have started saving for retirement many see themselves as
re saving for retirement just 25 of 20-29 year olds do so future lsquoaspiringrsquo savers Fully 41 intend to save in the future
t present over half (57) of 20-29 year olds are not saving compared to 27 of all employees and only 7 do not intend
r retirement compared to 46 of all employed adults to save for retirement This large group of aspiring savers
ven in China where 44 are always saving for retirement who are committed to the idea of putting money aside for
st 32 of 20-29 year olds do so retirement challenges the view that young people are unwilling
to save Furthermore since converting these young employees
his life cycle effect can be seen in numerous ways At the from aspiring savers to regular savers may depend on the
utset of adult life employees experience lower income and right economic conditions and appropriate financial incentives
igher spending as they prioritize and fund life events with a helping them is a major opportunity for governments and
ignificant impact on their ability or desire to save for retirement employers
T
p
(C
lsquofa
p
c
3
a
A
fo
E
ju
T
o
h
s
13 | The Young Pragmatic and Penniless Generation
35 25 20 19 12 9 27 41 7 7
I always make sure I only save for I am not saving for I am not saving for I have never saved that I am saving retirement occasionally retirement now although retirement though for retirement and for retirement from time to time I have in the past I do intend to donrsquot intend to
All 20 to 29 year olds
NET Low Index (0-5)
NET Medium Index (6-7)
NET High Index (8-10)
Chart 7 Younger employees are much more likely to aspire to save for retirement but the majority are not saving Q Which of the following best explains your approach to saving for retirement This can include money you contribute to any
long-term investment including pensions stocks and shares investment-linked insurances property etc
Other findings support the assertion that younger savers This can be seen in Chart 8 More 20-29 year olds claim that
are open to increasing their retirement savings Over a third they are not likely to be saving for retirement by any means
(37) of 20-29 year olds feel lsquovery responsiblersquo for ensuring (17 against 12 for all adults) and are generally less likely
a sufficient retirement income Note however that this does to use any of the savings products mentioned Revealingly
not translate into better developed financial plans and savings 20-29 year olds are far less likely to name lsquogovernment benefits
strategies Only 7 in this age group feel they have lsquowell in retirementrsquo as a source of retirement income although almost
developedrsquo personal retirement plans and 33 say they are all respondents have some such entitlement This may be due
lsquohardly saving anythingrsquo for retirement Clearly awareness of the to unawareness of government benefits and or greater
retirement situation does not translate into actual retirement scepticism about governmentsrsquo ability or willingness to
planning activity provide for them in old age
The Young Pragmatic and Penniless Generation | 14
Chart 8 Younger people are more likely not to be using any means of retirement savings Q Which financial means if any are you currently using to prepare for your retirement
33 Savings accounts 31
36 Government pension social security 24
25 Defined benefit plan 21
22 Private pension 17
23 Defined contribution plan 15
20 Life insurance 15
14 Stocks 10
14 My home 9
12 Mutual funds 8
9 Inheritance 7
9 Bonds 7
8 Investment property 7
5 Employee stock purchase 5
5 Investment insurances (annuities) 4
4 Long-term care insurance 4
6 Annuities 3
My business 2 3
Reverse mortgage 1 1
Other 3 2
12 None nothing 17
6 Donrsquot know 10
All 20 to 29 year olds
Leisure
Freedom
Far away
Insecurity
Enjoyment
Poverty
Ill health
Boredom
Opportunity
Dependent on others
Loneliness
Tired
Excitement
None of the above
Donrsquot know
Retirement associations What does the younger generation feel about retirement and want to get out of it Perhaps unsurprisingly 20-29 year olds are more
likely to be negative than older respondents associating retirement with boredom loneliness and ill health They are also far more
likely to believe retirement is lsquofar awayrsquo which is likely to be a barrier to retirement saving
15 | The Young Pragmatic and Penniless Generation
Chart 9 The younger generation has more negative associations with retirement Q Which if any of the following words do you most associate with retirement
44 Leisure 39
36 Freedom 30
17 Far away 26
25 Insecurity 25
25 Enjoyment 21
19 Poverty 19
15 Ill health 17
9 Boredom
13
16 Opportunity
13
10 Dependent on others
12
9 Loneliness
11
0
r olds
7Tired
1
6Excitement
6
2None of the above
1
2Donrsquot know 2
All 20 to 29 yea
Aspirations and responsibilities for retirement Income levels in retirement ung people have similar retirement aspirations to the general A high proportion (47) do not know if they are on course
pulation for example travel (63) spending time with to achieve their retirement income goal Combined with the
iends and family (61) and pursuing new hobbies (52) high level of financial responsibility young employees expect
r them however retirement also includes the responsibility of to assume in retirement it is clear that people not only need
ring for others Two-fifths (40) believe that lsquoadult children to build much greater awareness of what kind of financial
retirees should help through providing financial support to pressures they are likely to face in retirement but also require
eir parents if neededrsquo and 28 believe that this will affect greater support in establishing realistic retirement income
em directly in retirement through providing financial support targets which are capable of meeting their needs
their parents A fifth (21) also expect to spend some of
eir retirement caring for other family members while just
donrsquot expect to provide for anyone compared to 40 of all
ployees Clearly todayrsquos young employees anticipate serious
ancial responsibilities in their retirement
Yo
po
fr
Fo
ca
of
th
th
to
th
30
em
fin
The Young Pragmatic and Penniless Generation | 16
Chart 10 Many young employees do not think that they are on course to achieve target retirement income Q Do you think you will achieve this income [your estimated income needed in retirement]
Base 20-29 year olds
Yes I am on course to achieve my retirement
income
16
47
12
16
10
I donrsquot know if I am on course to achieve my
retirement income
No I am on course to achieve around
one-quarter (25) of
No I am on course to achieve around half of my
retirement income
No I am on course to achieve around
three-quarters (75) of my retirement income
532
China
586
Japan
United S
tate
s
628
Poland
635
Canad
a
636
Hunga
r
638
y
Fran
ce
645 647
Spain
Sweden
649
United K
ingdom
651
Germ
any
653
Nether
lands
666
my retirement income
When will young people retire Media reports about the need to raise the age of retirement appear to have influenced younger employees Fully 44 of 20-29 year
olds do not expect to be able to choose their retirement date although the younger generation do expect to retire at a similar age
to older employees 63 This varies considerable by country In the Netherlands young employees expect to retire eight years later
than those in Japan Some countries such as China and Japan have surprisingly low expected retirement ages suggesting that young
employees may benefit from having a better understanding of when government or workplace retirement benefits kick in
Chart 11 Young people in most countries expect to retire before 65 Q At what age do you expect to retire from all paid employment
Base 20-29 year olds
Despite expecting to retire at the same age as their parents younger employees are more open to a transition into retirement
reflecting their more flexible outlook toward work Around half (51) are happy to change the way they work in some way as they move
into retirement Just 8 expect to keep working as they do currently
17 | The Young Pragmatic and Penniless Generation
Part 3 What is holding young employees back Insights into what young employees feel is holding them back from saving or saving more can be used to encourage younger people to adopt more positive savings behaviors This chapter explores the attitudes of young employees toward the financial obstacles they face and asks what actions they have taken in preparation for retirement The findings reveal that while the majority lacks adequate planning for their retirement needs financial shortcomings are only part of the stor y Spending preferences play a key role in the savings gap of advanced economies
The Young Pragmatic and Penniless Generation | 18
Lack of money to invest 37
16 The uncertain economic environment
7 Fear of poor investment returns over the coming years
6 I donrsquot trust the financial services industry
6 I donrsquot know how to go about investing for the long-term
4 oncerns about unstable currencies currency fluctuations
4 Complexity of investment products
4 I canrsquot afford to take financial advice
3 The fees charged by financial services companies
3 I donrsquot see the need to save for the long-term
Other 2
Donrsquot know 8
A pay rise
More generous tax breaks on long-term savings and pensions products
A better retirement plan pension match from my employer
Better and more frequent information about my retirement savings
Simpler investment products that I can understand with less jargon
Access to professional financial advice so that I have personalized recommendations on what steps I need to take
Access to financial education so that I am more aware of what I need to do for myself
Better legal protection in case I am sold the wrong product
Other
Not applicable - I already have sufficient savings
Donrsquot know
Obstacles and incentives to saving
Chart 12 Younger employees feel they donrsquot have money to invest for retirement Q What is the single biggest obstacle to you saving for retirement right now
Base 20-29 year olds
C
What is the single biggest obstacle preventing twentysomethings that they rank pressing and desirable life goals such as marriage
m saving for retirement Not having enough money to invest starting a family vacations and other leisure activities above the
top of the list cited by over a third (37) although this figure need to plan for retirement This suggests the savings gap is
ops to just 6 in the emerging market of China where mean preference-driven
omes are the lowest by far ($18000) suggesting that lack of
sh may be partly a state of mind Young employees in China The biggest obstacle to retirement savings cited by one-eighth
actually more worried about local concerns such as economic (13) of respondents is either not knowing how to invest for the
certainty (29) and currency instability (15) Behavioral long-term or the complexity of investment products charges and
ance has an impact too with the way young employees frame fees Ready solutions to this include improving young employeesrsquo
eir financial priorities creating its own obstacles to saving financial literacy about retirement planning and creating easier
many as 57 of 20-29 year olds believe that saving for access to professional financial advice
tirement is important but not a current priority suggesting
fro
is
dr
inc
ca
are
un
fin
th
As
re
19 | The Young Pragmatic and Penniless Generation
Chart 13 More money would incentivize young employees to save for retirement Q Which if any of the following would encourage you to save for retirement
Base 20-29 year olds
57 A pay rise
More generous tax breaks on long-term savings and pensions products
34
A better retirement plan pension match from my employer
33
Better and more frequent information about my retirement savings 26
Simpler investment products that I can understand with less jargon 24
Access to professional financial advice so that I have personalized recommendations on what steps I need to take 23
Access to financial education so that I am more aware of what I need to do for myself 22
Better legal protection in case I am sold the wrong product 16
Other 2
Not applicable - I already have sufficient savings 2
Donrsquot know 10
Chart 14 Very few younger employees have a written plan for retirement Q Which of the following best describes your retirement planning strategy
Base 20-29 year olds
5 Donrsquot know I have a
written plan
8
34 I have a plan but it is not
52 written down
I do not have a plan
Turning to incentives greater remuneration predictably tops a list Retirement planning of what would encourage 20-29 year olds to save for retirement Retirement planning is essential to adequate retirement saving
More tellingly a third (33) would like their employer to provide although it is somewhat lacking in todayrsquos younger employees
a better retirement plan into which both parties contribute Over half (52) have no retirement planning strategy at all
Better information and simple products would also help more and only 8 have noted down their retirement strategy
people to save A quarter (26) would be encouraged to save by
better and more frequent information about retirement savings Nevertheless the respondents polled believe that the current
while a similar number (24) want simple investment products global economy makes retirement planning increasingly
that are easy to understand As with the previous question a important ndash 71 agreed with this statement It is clear from this
lack of investment knowledge and the complexity of investment that young people between the ages of 20 and 29 do not lack
products are revealed as obstacles to savings the will to save they lack the opportunity
The Young Pragmatic and Penniless Generation | 20
Part 4 Creating the right conditions for young employees to save How may young employeesrsquo obstacles to saving be overcome For retirement readiness this will be a defining question of the early twenty-first centur y ndash and an extremely challenging one given the number of serious issues affecting younger employeesrsquo finances What was learned in the previous chapter about encouraging young employees to save is a start This chapter examines which areas and triggers to saving can be unlocked and whether government employer or individual should take most responsibility
21 | The Young Pragmatic and Penniless Generation
Friends and family
Professional financial adviser
17
24
Bank adviser 9
Personal finance websites online retirement planning tools
My employer
Government website
4
8
7
Insurance agent spokesperson
Accountant
3
3
Personal finance media 3
Lawyer
Bank website
3
2
Insurance company website
Donrsquot know
2
15
Information and advice on retirement saving strong theme revealed by our findings is that younger This finding is remarkably consistent across the countries
mployees want more information on savings products and sur veyed despite significant differences in market makeup
etter access to advice The largest share 24 (compared although some differences exist For instance a quar ter
o 17 for all employees) finds friends and family to be the (25) of young employees in France turn to bank advisers
ost important source of advice followed by professional for financial information nearly triple the number among all
dvisers (17) and bank advisers (9) That young employees young people (9)
urn to friends and family first suggests an unmet need for
rofessional financial advice This is both a challenge and an
pportunity for the financial ser vices sector
hart 15 For young employees friends and family are the leading source of retirement savings information Which of these sources (of information) is most important to you
ase 20-29 year olds
A
e
b
t
m
a
t
p
o
CQ
B
What is the role of the workplace in retirement planning Does this influence what retirement benefits younger
In response to shifting employment patterns todayrsquos younger employees expect from their workplace Certainly a majority
employees are less loyal to their employers than older workers favor workplace retirement plans with 61 believing that these
Fully 39 of 20-29 year olds are planning to look for a new job should be a fundamental part of pay (although this is lower
in the next 12 months compared to 29 of all workers and than for employees overall) and just 4 feel that retirement
31 frequently think about quitting their jobs Strikingly while planning should be left entirely to individuals
53 of all workers plan to stay with their current employer
until retirement just 37 of 20-29 year olds say this However there is evidence of a slight shift in perceptions
Younger workers are less likely to want workplace retirement
Doubtless much of this is because younger workers are more plans over other factors Of those who want employer
mobile and have more opportunities Another trigger to lower retirement plan contributions only 46 wanted this even if
employer loyalty may be the expectation of holding more jobs it reduced benefits and 35 (compared to 43 of all workers)
and even pursuing multiple careers over a working lifetime if it cut jobs
The Young Pragmatic and Penniless Generation | 22
Donrsquot know Employers should be
required to contribute to workersrsquo pensions
5 Nothing ndash it should be left to the government to take 18
care of its citizens 28
4 Nothing ndash it should be left to individual employees to
take care of themselves
13
22
Employers should provide a range of flexible benefits
and allow individuals to choose which benefits they
actually want
10 Employers should
be required to make a pension available but not
to contribute into it
Employers should not be required to provide pensions but should
provide information on how to plan for retirement
Chart 16 Most young workers feel that their employer should provide some kind of pension Q In the future what if anything should employers do to help people plan for retirement
Base 20-29 year olds
Are other workplace benefits more important Younger workers were asked to rate the importance of various workplace benefits The results reveal how highly they value the
elements of their compensation package Chart 17 shows that 87 of young employees believe a workplace retirement plan with
employer contributions would be an important factor when choosing their next job While retirement may be decades away for
twentysomethings 80 believe programs provide for a phased retirement are important
23 | The Young Pragmatic and Penniless Generation
Basic salary 94
93 Holiday entitlement
91 Overtime and bonus pay
91 Location of workplace
88 Medical health insurance
87 Opportunities for career progression
Access to a workplace retirement plan with employer contributions 87
Access to good training provision 86
Flexible working hours 85
Life insurance (death in service benefits) 81
Phased retirement or other employer programs providing for a transition into retirement 80
Ability to work past the normal retirement age 70
Access to a workplace retirement plan without employer contributions
67
Employee stock plans 65
Access to creche help with the cost of childcare 59
Opportunities for foreign travel 50
Company car 43
Chart 17 Workplace retirement plans are a relatively low priority for younger workers when choosing a job How important to you would the following workplace benefits be if you were choosing your next job
ase 20-29 year olds
Q
B
Regarding workplace benefits provided by employers today considered just enough to fulfill basic needs and in China a
young employees are about as likely as all workers to be offered fully formed nationwide retirement system is still some way off
retirement tools such as annual plan statements and online The future shape and affordability of these plans is debated in
tools from their employer though it is concerning that 24 do all of the sur vey countries to var ying degrees
not know if such tools are available or not Those provided are
considered helpful Younger workersrsquo views on reform are important because
changes to government retirement benefits are more likely
The role of government to affect them than any other part of the working population
The generosity of government retirement benefits varies The main concern cited by 57 is of facing less generous
considerably in the countries sur veyed In some countries such government retirement benefits than those enjoyed by their
as France government benefits are the primar y mechanism parentsrsquo generation
for funding retirement while in the United Kingdom they are
The Young Pragmatic and Penniless Generation | 24
The government should reduce the overall cost of state pension provision by
reducing the value of Donrsquot know individual pension plans
25 22
4 The government should not do anything State pension provision will
remain perfectly affordable in the future
28
21 The government should increase overall funding
available for the state pension through
raising taxes
The government should take a balanced approach with some reductions in individual payments and
some increases in tax
Chart 18 Young workers think that the government retirement system will need to be reformed Q With the cost of government retirement benefits becoming a greater concern as people live longer which
if any of the following do you think the government should undertake
Base 20-29 year olds
The younger generation believes that the government cannot What do young employees look for in a retirement product continue to provide as it does now ndash just 4 think government The sur vey findings show that young employees have
benefits will remain affordable to society However there is no reser vations about employer and government retirement
consensus on what governments should do to reform retirement benefits So what then do they want from a private savings
plan systems Over a fifth (22) think retirement entitlements product The savings product feature most valued by younger
should be cut just over a fifth (21) think governments should workers is protection against investment risk (Char t 19)
raise taxes and more than a quarter (28) think a mixture of This may be in the form of no loss of initial investment a
the two is the best solution Another quarter admits that they guaranteed income stream or protection against inflation
donrsquot know what should be done This is reasonable ndash the initial investment of those farthest
from retirement is most at risk However less consideration
is given to savings grow th through investment returns This
suggests that there is an oppor tunity to educate young
workers about the trade-off between returns and risk
management and what they stand to gain
25 | The Young Pragmatic and Penniless Generation
Chart 19 Products which protect against investment risk are the most important to young workers ( interested) Q Thinking about the types of financial products you could purchase to help provide you with security in retirement on a scale of 1 to 5
how interested are you in the following options
Base 20-29 year olds
A product providing a guaranteed retirement income stream or lifetime income in retirement 82
A product which protects my retirement income against inflation 81
A product which guarantees that I donrsquot lose my initial investment 81
A product which helps meet the cost of long-term care if I become unable to look after myself 80
A product which protects my capital from poor investment returns 79
A product which generates a retirement income and allows me to take a lump sum from the investment should I need to 79
A product where the annual management charges are kept low 78
A product which enables me to keep some control over how my savings are invested during my retirement 77
A product which manages the asset allocation so that I am never exposed to a level of risk Irsquom not comfortable with 76
A product which continues to provide a retirement income to my spouse in the event that I die first 75
A product which protects my family against having to pay estate taxes when I die 72
A product which locks in investment returns during the good years 70
The lsquodefined ambitionrsquo retirement system in This removes some of the disadvantages of leaving
the Netherlands a sustainable retirement solution retirement liabilities exclusively up to employers
for young workers (defined benefit) or employees (defined contribution)
In the Netherlands as elsewhere young workers are faced In the Netherlands this is likely to involve legislation which
with an increasing retirement age decreasing government lets retirement funds automatically adjust pay-outs and
suppor t for retirement and declining traditional defined retirement age as life expectancy changes xii
benefit employer retirement plans Reforms proposed
by the Dutch may show a way for ward for all mature and This model has garnered interest elsewhere In the
aging economies United Kingdom Pensions Minister Steve Webb expressed
interest on a more limited scale with a government
rsquoDefined ambitionrsquo proposes that risks are not taken on fully guarantee for a minimum rate of return for defined
by either employer or employee but are shared contribution retirement plans
The Young Pragmatic and Penniless Generation | 26
Recommendations Enabling young workers to save The studyrsquos findings reveal that the majority of young workers (66) are either saving consistently or aspire to start saving but face challenges including debt low pay and funding for significant life events and generational changes to the economic landscape and government and employer support If young people are to achieve a prosperous retirement their willingness to save should be met with better opportunities to save Here is what can be done by employers governments and young people themselves to address retirement planning concerns for younger adults
27 | The Young Pragmatic and Penniless Generation
Individuals Employers and governments
Determine how much income you need in retirement Auto-enroll employees into a workplace retirement plan Young people accept the need to save for retirement but donrsquot If an auto-enrollment workplace retirement plan is feasible
know how to act on that need They can become more retirement this can play a major role in getting young workers saving early
savvy simply by talking to friends and family (as do 24 of and regularly Combined with auto-escalation (the automatic
our respondents already) or employers going online to use annual increase in retirement plan contributions) and matching
retirement calculators or reading the personal finance media contributions it can lead to greater retirement readiness
Seek out a financial advisor Provide more flexible savings products through the workplace Young people are faced with life events that make it easy to Not all savings journeys start with a retirement plan particularly
feel overwhelmed by financial priorities in addition to retirement for young people who may think of retirement as lsquotoo far awayrsquo
planning Soliciting advice from a finance professional early in Employers can kick-start the savings habit in younger workers
life (17 of young employees have done so already) helps with by providing flexible easy to access and easy to understand
planning and priorities and making sense of long-term finances savings plans as a more attractive starter option
Start saving now and save consistently Make company retirement plans more portable As with all employees young people will strengthen their Young people move jobs much more often than previous
retirement readiness simply by saving regularly Today only 25 generations of employees so savings like DC retirement plans
of young people always save yet even small regular amounts need to follow employees when they change jobs
will improve retirement readiness over time
Make tax incentives more effective Ask your employer about workplace retirement savings plans All countries encourage long-term savings through tax relief but
and other retirement benefits young people often arenrsquot aware of this or donrsquot understand it
While one third (33) of young people believe that a workplace A more targeted system of tax relief could help provide clearer
retirement savings plan provides a major opportunity to start and simpler signals to younger people about the financial
saving employers often experience difficulties in engaging benefits of long-term saving
younger employees in discussions about retirement planning
The workplace is an important channel for achieving retirement Make better financial education central to the workplace readiness so be sure to max out on any employer contributions retirement offer
Young people who aspire to save may be prevented from
doing so by setting the wrong financial priorities Workplace
retirement education ndash alongside professional advice ndash can help
guide young people toward the right long-term priorities at an
earlier age in life
The Young Pragmatic and Penniless Generation | 28
29 | The Young Pragmatic and Penniless Generation
Glossary
Aegon Retirement Readiness Index (ARRI) c areer average retirement plan The ARRI assesses the relative levels of retirement A type of defined benefit plan that is based on an
preparedness of employees across different countries on a employeersquos average retirement earnings over the duration
scale from 1 to 10 The Index is based on three questions of plan membership Same as average salary plan
covering attitudes and three questions covering behaviors
defined ambition (DA) plan average salary plan A type of retirement plan in which retirement plan risks
A type of defined benefit plan that is based on an are shared between the employer and the employee
employeersquos average retirement earnings over the duration It offers greater certainty to savers around the final value
of plan membership Same as career average plan of their retirement assets than in DC plans and less
cost volatility for employers than with DB plans In the
a nnuity Netherlands Defined Ambition (DA) retirement plans are
A form of contract sold by life insurance companies that being introduced in order to help relieve the pressure on
guarantees a fixed or variable payment to the annuitant employers while still trying to provide employees with a
at some future time usually retirement All capital in the more secure retirement plan The United Kingdom too is
annuity grows tax-deferred looking at DA retirement plans as a solution
auto enrollment defined benefit (DB) plan An employer-sponsored retirement plan in which the An employer-sponsored retirement plan where the amount
employer is able to enroll an employee without that of future benefits an employee will receive from the plan is
employeersquos express authorization The employer determines defined typically by a formula based on salary history and
what percentage of the employeersquos salary or wages is years of service The amount of contributions the employer
contributed to the plan The employee is able to change is required to make will depend on the investment returns
this percentage and can opt out of enrollment in the plan experienced by the plan and the benefits promised
Contrast defined contribution plan
a uto-escalation A feature of a plan which automatically increases the defined contribution (DC) plan percentage of (retirement) funds saved from salary An employer-sponsored retirement plan such as a 401(k)
This feature generally uses a default or standard plan or a 403(b) plan in the United States in which
contribution escalation rate contributions are made to individual participant accounts
Depending on the type of DC plan contributions may be
B aby Boomers made by the employee the employer or both
A term used to refer to people generally born between
the end of World War II in 1945 and the mid 1960s The employeersquos benefits at retirement or termination of
Other generations Silent Generation - the generation born employment are based on the employee and employer
between 1925 and 1945 Generation X - the generation contributions and earnings and losses on those
born between 1965 and 1979 Millennials or Generation contributions See also 401(k) and 403(b) plan
Y - the generation born between 1980 and 2000 and often Contrast defined benefit plan
classified as the children of Baby Boomers
The Young Pragmatic and Penniless Generation | 30
401(k) plan An employer sponsored retirement plan that enables
employees to make tax-deferred contributions from their
salaries to the plan
403(b) plan An employer-sponsored defined contribution plan that
enables employees of universities public schools and
non-profit organizations to make tax-deferred contributions
from their salaries to the plan
final salary plan A type of defined benefit plan in which retirement
benefits are based on final retirement salary in the years
immediately before retirement benefits are received
Millennials A term used to refer to the people born from about 1980
to 2000 brought up using digital technology They are
often classified as the children of Baby Boomers
r etirement (or pension) plan Provides replacement for salary when a person is no
longer working due to retirement In the case of a defined
benefit retirement plan the employer or union contributes
to the plan which pays a predetermined benefit for the
rest of the employeersquos life based on length of service and
salary Payments may be made either directly or through
an annuity Retirement plan payments are taxable income
to recipients in the year received The employer or union
has fiduciary responsibility to invest the retirement plan
funds in stocks bonds real estate and other assets earn
a satisfactory rate of return and make payments to retired
workers Retirement plan funds holding trillions of dollars
are one of the largest investment forces in the stock
bond and real estate markets If the employer defaults in
the United States retirement plan payments are usually
guaranteed by the Pension Benefit Guaranty Corporation
(PBGC)
variable annuities (VA) An insurance contract in which the insurance company
guarantees a minimum payment at the end of the
accumulation period The payments may vary depending
on the financial performance of the managed portfolio
31 | The Young Pragmatic and Penniless Generation
About Aegon Transamerica Center for Retirement Studiesreg and Cicero Consulting
Aegon Transamerica Center Aegon is an international life insurance pensions and asset reg management company with businesses in over 20 markets for Retirement Studies in the Americas Europe and Asia Aegon companies employ The Transamerica Center for Retirement Studiesreg (TCRS) is
around 24000 people and serve millions of customers a division of the Transamerica Institute a nonprofit private
worldwide foundation TCRS is dedicated to educating the public on
wwwaegoncom emerging trends surrounding retirement security in the
United States TCRSrsquo research emphasizes employer-sponsored
In 2010 Aegon became a founding member of the Global retirement plans issues faced by small to mid-sized companies
Coalition on Aging which seeks to raise awareness of aging and their employees and the implications of legislative and
issues among policymakers and the general public A major aim regulatory changes Transamerica Institute is funded by
of the coalition is to transform the way we think and speak contributions from Transamerica Life Insurance Company and
about aging replacing the familiar rhetoric of lsquoproblemsrsquo with its affiliates and may receive funds from unaffiliated third-
a more positive discussion of lsquopossibilitiesrsquo and lsquoopportunitiesrsquo parties For more information about TCRS please refer to
wwwglobalcoalitiononagingcom wwwtransamericacenterorg
Cicero Consulting A leading consultancy firm serving the banking insurance and
asset management sector Cicero specializes in public policy
and communications consulting as well as global thought
leadership and independent market research Cicero was
established in 2001 and now operates from offices in London
Brussels Washington and Singapore As a market leader in
pensions and retirement research Cicero designed
and analyzed the research and contributed to the report
wwwcicero-groupcom
The Young Pragmatic and Penniless Generation | 32
Marta acebo Mark Green Patricia Plas
Paula alvarez douGlas henck scott roane
Frits bart wendel hoFMan thurstan robinson
Grace basile
lynette belFry
andrew berwick
Frans van der horst
tatsuo kai
herMan kaPPelle
Patti rowey
sarah russell
Joost van schaGen
robin boon Gaacutebor kePecs dick schiethart
bert-JaaP brons Marco keiM erik schouten
douG brooks
libby buet
kent callahan
JaiMe kirkPatrick
bas knol
roGer koch
anGela seyMour Jackson
kate sMith
renske stoker
Jeanne de cervens
dana chen
Peter kunkel
alexander kuiPers
eyleen sun
MartiJn tans
arkadiusz chMurzynski
heidi cho
brian lewis
Mike linder
GreG tucker
Mark twiGG
siMon clow siMon luke catherine wanG
robert colliGnon Jason Ma Marc van weede
catherine collinson GrzeGorz Mathea tiM willaert
wendy daniels
Michel denizot
edit drevenka
Paul Middleton
takaoh MiyaGawa
david Moulton
daniel wriGht
alex wynaendts
MacieJ zaPala
Jan driessen
kelly Fu
adrian Grace
Mark Mullin
Marcelle noltenius
stiG nybo
Peacuteter zatykoacute
vicky zeldin
Disclaimer This repor t contains general information only and does
not constitute a solicitation or offer No rights can be
derived from this repor t Aegon its par tners and any of
their affiliates or employees do not guarantee warrant
or represent the accuracy or completeness of the
information contained in the repor t
Acknowledgements
33 | The Young Pragmatic and Penniless Generation
References and notes i For a comparison of different retirement systems see lsquoPensions at a Glance 2011rsquo OECD 2011 ii As the survey was carried out online the survey results in China are based toward people living in urban areas iii ldquoPensions Marketsrdquo TheCityUK March 2013 p9 iv Global Employment Trends for Youth 2013 A generation at risk International Labour Organisation 2013 p2 v Eurostat July 2013 vi OECD Employment and Labour Markets Key Tables from OECD No 2 2012 vii The Federal Reserve Bank of New York 2012 Quarterly Report on Household Debt March 29 2013 viii World Bank ix lsquoWorld-class povertyrsquo The Economist February 27 2013
httpwwweconomistcomblogsanalects201302chinas-poor x lsquoThe Chinese slow down in char tsrsquo The Economist July 15 2013 xi lsquoChina rsquos welfare system difficult inflexible and blatantly unfairrsquo The Guardian April 23 2013
httpwwwtheguardiancomglobal-development2013apr23china-welfare-system-inflexible-unfair xii lsquo The Dutch experience with Defined Ambition pensions and the impact on companiesrsquo Aegon Global Pensions March 12 2013
httpwwwaegonglobalpensionscomenHomePublicationsNews-archiveNewsThe-Dutch-experience-with-Defined
Ambition-pensions-and-what-that-may-mean-for-companies-in-the-Netherlands-and-the-UK
shy
The Young Pragmatic and Penniless Generation | 34
Contact information HE ADQUARTER S
Aegon NV
PO Box 85
2501 CB The Hague
Telephone +31 70 344 32 10
w w waegoncom
MEDIA REL ATIONS
Telephone +31 70 344 89 56
Email gcc-iraegoncom
Countr y Index score
Germany 548
China 541
Canada 524
United States 519
The Netherlands 488
United Kingdom 486
Sweden 483
France 475
Hungar y 473
Poland 463
Spain 440
Japan 430
Total 489
Appendix 1 Aegon Retirement Readiness Index (ARRI) - technical note
Aegon Retirement Readiness Index (ARRI)-technical note 2013 Weightings (2012 in brackets) A sample of 12000 pre and post retirees was drawn from 1 Personal responsibilit y 20 (30)
twelve countries Of these 10800 (90) were pre-retirees 2 Level of awareness 30 (35)
and these were chosen for fur ther analysis of their plans 3 Financial capability Understanding 30 (25)
for retirement The Index that was developed forms an 4 Retirement planning 50 (50)
assessment of how well an individual perceives the adequacy 5 Financial preparedness 60 (60)
of his her own finances and financial awareness specifically 6 Income replacement 35 (35)
for addressing his retirement needs
Note that the weights devised to show the relative
The lsquotargetrsquo for the Index impor tance of each question in calculating the Index add to
The question on current savings activity was designated as the 225 These were then re-scaled so that a final scale of 1 to
target question (dependent variable) for predicting the level of 10 was calculated
preparedness for retirement Responses to this question were
then correlated with each of the six key questions (variables) Final scores by country below to understand which were driving the activity These weightings were multiplied by the actual scores for each
This was done because it was not felt to be correct to give respondent for each of the six Index questions and aggregated
each of the six variables described below an equal weight as to obtain a provisional score This was then adjusted to
they appeared to have quite different relationships to the give countr y scores out of 1 to 10 (A score of 1 to 10 had
target question sufficient differentiation to be used as the scale for analysis)
1 Personal responsibilit y for income in retirement
2 Level of awareness of need to plan for retirement
3 F inancial capability Understanding of financial matters
regarding plans for retirement
4 Retirement planning Level of development of plans
5 Financial preparedness for retirement
6 Income replacement Level of projected income replacement
The weighting To estimate the statistical significance of the decline in overall
scores in this yearrsquos Index is theoretically incalculable
Two things have changed from 2012 to 2013
1 C anada and China have joined the sample
2 The new countries have thus influenced the weights of
emphasis placed on the 6 variables used to calculate
the score hence the weights attached to the complex
calculation have changed
However it is noticeable that for countries which were sampled
in both time periods the mean scores for the six individual
variables have almost invariably declined and on average more
than half of them have shown a significant level of decline
In particular the question lsquoDo you think you will achieve this
incomersquo has for all countries shown a significant level of
decline We thus hypothesize that the comparative results
show a significant decline
The Young Pragmatic and Penniless Generation | 36
Net
herl
ands
Net
herl
ands
Net
herl
ands
Ger
man
yG
erm
any
Ger
man
yBase 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
Better off 7 4 23 Sw
eden
Swed
en11 5 7 8 3 11 14 50 5
Swed
en
About the same 19 18 27 23 8 19 18 13 29 29 24 21 U
ntie
dU
ntie
dU
nite
d Worse off 66 74 41 58 79 69 71 76 51 47 21 55
Kin
gdom
Kin
gdom
Kin
gdom
Donrsquot know 9 3 9 9 9 4 4 8 9 10 6 19
Fran
ceFr
ance
Fran
ce
Chart 2 Education of 20 ndash 29 year olds by country Q Please choose from the following list the highest level of educational or professional qualification you have
Spai
nSp
ain
Spa
in
Pol
and
Pol
and
Pol
and
Hun
gary
Hun
gary
Hun
gar y
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
dU
nite
d 100 100 100 100 100 100 100 100 100
Stat
es100 100 100
Stat
esSt
ates
Less than high school graduate 2 44 6 14 1 3 2 7 1 3 Ca
nada
Cana
daC
anad
aHigh school graduate 11 33 53 23 22 22 4 41 14 21 1 2
Some college or trade school 46 2 9 9 9 19 37 14 28 20 4 33 Ch
ina
Chin
aC
hina
College degree University degree 31 15 27 30 41 43 21 33 50 46 9 57
Postgraduate degree or 8 3 3 23 25 11 36 1 8 9 80 6 qualification Ja
pan
Japa
n Ja
pan
Other 2 4 1 1 1 2 0 5 0 6 2
None 0 1 1 0 1 0 0
NET Less than undergrad degree 61 82 70 47 34 46 43 66 42 45 11 37
NET Undergrad degree or higher 39 18 30 53 66 54 57 34 58 55 89 63
Chart 3 Aegon Retirement Readiness Index scores for young employees by country
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
NET Low Index (0-5) 80 64 79 81 85 78 81 73 65 61 61 87
NET Medium Index (6-7) 15 30 18 15 14 21 17 23 25 31 31 12
NET High Index (8-10) 4 6 3 3 1 2 2 4 10 8 7 1
Appendix 2 Country comparisons Chart 1 The majority of young employees believe that they will be worse off in retirement compared to their parents Q Do you think that future generations of retirees will be better off or worse off than those currently in retirement
37 | The Young Pragmatic and Penniless Generation
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsI always make sure that 27 34 27 26 17 14 19 22 35 33 32 20 I am saving for retirement
I only save for retirement G
erm
any
Ger
man
y21 27 20 13 17 21 16 6 17 24 20 24 occasionally from time to time
I am not saving for retirement now 6 11 8 11 5 15 9 4 10 8 9 5 although I have in the past Sw
eden
Swed
en
I am not saving for retirement 35 23 34 46 53 40 49 54 36 33 38 46 though I do intend to U
nite
dU
ntie
dK
ingd
omK
ingd
om I have never saved for retirement and 11 6 10 5 8 10 6 13 3 2 1 6 donrsquot intend to
Fran
ceFr
ance
Chart 5 Younger people are more likely not to be using any means of retirement savings Sp
ain
Spai
nQ Which financial means if any are you currently using to prepare for your retirement
Pol
and
Pol
and
only asked in Germany only asked in Spain
Hun
gary
Hun
gary
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
dSt
ates
Stat
es100 100 100 100 100 100 100 100 100 100 100 100
Defined benefit plan 16 10 25 29 15 3 76 11 20 13 5 Ca
nada
Cana
daDefined contribution plan 28 10 17 19 19 14 10 23 40 7 3
Private pension 8 18 14 10 5 9 4 13 12 40 66 4 Ch
ina
Chin
a Government pension social security 12 43 14 21 8 7 4 18 27 33 71 35
Stocks 5 12 14 7 4 17 7 2 13 10 23 9
Bonds 1 8 5 6 2 16 4 2 8 13 14 3 Ja
pan
Japa
n
Mutual funds 2 14 23 4 2 10 3 4 7 16 9 6
Investment insurances (annuities) 2 3 2 3 2 9 4 5 2 4 6 1
Savings accounts 23 37 38 25 23 6 29 15 36 37 65 36
Investment property 2 10 6 7 9 2 5 2 5 11 18 1
Employee stock purchase 1 1 1 4 1 29 0 4 1 7 1
My home 10 5 8 7 7 8 4 6 6 14 30 1
Reverse mortgage 1 4 2 4
My business 2 1 3 2 2 4 1 1 2 4 12 1
Inheritance 3 11 7 11 7 9 9 8 7 9 6 2
Annuities 1 15 2 2 1 4 3 2 1 2 8
Long-term care insurance 2 1 3 2 9 5 1 6 4 7 1
Life insurance 6 11 8 8 14 3 18 15 19 18 36 17
Unterstuumltzungskasse aus 2 Eigenmitteln finanziert
Unterstuumltzungskasse vom 2 Arbeitgeber finanziert
Chart 4 Younger employees are much more likely to aspire to save for retirement Which of the following best explains your approach to saving for retirement This can include money you contribute to any long-term
investment including pensions stocks and shares investment-linked insurances property etc
Q
The Young Pragmatic and Penniless Generation | 38
Plan de empleo mixto 2 (combinacioacuten de las dos anteriores)
Other 1 6 4 0 1 2 2 3 2 2 3 3
None nothing 8 14 12 23 25 31 6 27 21 17 3 24
Donrsquot know 29 6 17 13 19 8 4 9 7 7 0 9
hart 6 The younger generation has more negative associations of retirement Which if any of the following words do you most associate with retirement
Net
herl
ands
Net
herl
ands
Ger
man
yG
erm
any
Swed
enSw
eden
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
d100 100 100 100 100 100 100 100 100 100 100 100
Kin
gdom
Kin
gdom
Freedom 35 32 36 39 19 26 11 20 35 40 37 33
Opportunity 7 27 25 18 4 8 9 10 17 16 9 16 Fr
ance
Fran
ceLeisure 58 48 36 41 23 24 43 32 50 50 55 6
Excitement 2 5 3 8 2 6 1 2 17 17 4 3 Sp
ain
Spai
nPoverty 11 26 23 11 26 14 37 44 7 5 6 20
Insecurity 34 24 18 16 20 18 35 56 10 9 18 44 P
olan
dP
olan
dLoneliness 4 10 17 16 12 7 11 8 5 9 20 12
Ill health 2 19 7 14 15 9 49 23 6 6 29 11 H
unga
ryH
unga
ryDependent on others 11 11 5 18 14 8 18 19 14 6 11 4
Tired 3 4 8 10 14 10 17 6 7 7 13 19 U
nite
dU
nite
dFar away 38 19 25 21 61 32 2 13 33
Stat
es33 14 22
Stat
es
Boredom 14 16 6 12 16 12 15 8 12 12 16 17 Ca
nada
Cana
daEnjoyment 21 16 17 23 14 29 5 3 37 37 35 15
None of the above 0 1 1 2 0 2 1 1 2 2 1 2
Donrsquot know 2 2 3 3 2 2 1 2 0 Ch
ina
6 Ch
ina
hart 7 Many young employees think they are not on course to achieve target retirement income Ja
pan
Japa
n Do you think you will achieve this income [your estimated income needed in retirement]
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
I donrsquot know if I am on course to 56 37 57 59 50 39 49 48 48 41 22 68 achieve my retirement income
No I am on course to achieve around one-quarter (25) of my 10 14 9 13 15 14 14 13 10 10 10 7 retirement income
No I am on course to achieve around 12 20 14 11 19 19 18 15 12 11 23 12 half of my retirement income
No I am on course to achieve around three-quarters (75) of my 8 14 7 4 8 15 9 8 6 11 20 5 retirement income
Yes I am on course to achieve my 15 15 13 14 8 13 11 17 25 27 25 8 retirement income
CQ
CQ
39 | The Young Pragmatic and Penniless Generation
Chart 8 Young people in most countries expect to retire before 65 Q At what age do you expect to retire from all paid employment
Net
herl
ands
Ger
man
y
Swed
en
Uni
ted
Kin
gdom
Fran
ce
Spai
n
Pol
and
Hun
gary
Uni
ted
Stat
es
Cana
da
Chin
a
Japa
n
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
40 or under 0 1 1 0 0 1 3 1 5 12
41-50 1 2 3 5 2 2 6 3 9 4 37 9
51-59 4 4 4 6 2 4 11 5 7 10 30 1
60 5 11 8 12 10 13 19 12 12 16 21 27
61-64 2 11 10 2 20 7 4 13 5 3 1 2
65 17 22 44 31 34 32 16 26 26 32 3 25
66-69 42 32 15 9 12 29 20 13 9 9 0 1
70 19 11 10 18 10 5 10 9 13 12 0 6
71+ 5 5 5 9 4 5 5 3 7 5 1 4
Never 2 1 1 2 2 2 6 4 1 0 0
Donrsquot know 2 3 2 5 3 2 8 9 5 5 1 13
Mean 67 65 65 65 64 65 63 64 63 64 53 59
Median 67 65 65 65 65 65 65 65 65 65 55 60
Chart 9 Younger employees feel they donrsquot have money to invest for retirement Q What is the single biggest obstacle to you saving for retirement right now
Net
herl
ands
Ger
man
y
Swed
en
Uni
ted
Kin
gdom
Fran
ce
Spai
n
Pol
and
Hun
gary
Uni
ted
Stat
es
Cana
da
Chin
a
Japa
n
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
The uncertain economic environment 19 8 13 9 13 19 11 14 12 9 29 27
Lack of money to invest 28 41 33 43 47 34 48 55 47 50 6 19
Fear of poor investment returns over the coming years 2 5 10 7 5 6 8 2 6 8 14 6
Complexity of investment products 4 4 4 3 5 3 5 2 12 5
I donrsquot know how to go about investing for the long-term 2 3 10 8 5 5 3 3 6 8 7 9
The fees charged by financial services companies 2 4 4 2 4 3 4 2 3 5 2 5
I canrsquot afford to take financial advice 3 3 6 8 2 4 3 5 3 2 3 2
I donrsquot trust the financial services industry 12 11 8 6 5 10 6 2 2 3 5 4
I donrsquot see the need to save for the long-term 6 1 2 2 3 3 3 1 2 1 4 3
Concerns about unstable currencies currency fluctuations 2 5 1 3 3 3 4 3 4 5 15 2
Other (PLEASE STATE) 3 3 1 1 3 2 4 6 2 2 1
Donrsquot know 17 12 11 7 8 6 3 6 8 6 3 17
The Young Pragmatic and Penniless Generation | 40
Chart 10 More money would incentivize young employees to save for retirement Q Which if any of the following would encourage you to save for retirement
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsMore generous tax breaks on long-term savings and pensions 20 44 30 32 27 23 42 42 33 43 40 32 products
Ger
man
yG
erm
any
Access to financial education so that I am more aware of what 24 6 14 21 16 22 21 12 23 24 43 25 I need to do for myself
Swed
enSw
eden
Access to professional financial advice so that I have personalized
Uni
ted
20 24 23 23 15 21 25 9 22 23 44 13 U
nite
drecommendations on what steps
Kin
gdom
Kin
gdom
I need to take
Simpler investment products that 12 33 19 28 20 Fr
ance
18 27 16 32 28 36 10 Fr
ance
I can understand with less jargon
Better and more frequent information about my retirement 16 28 20 27 27 23
Spai
n20 18 25 31 45 22
Spai
nsavings
Better legal protection in case I am 12 18 13 18 10 24 18 13 13 19 21 6 P
olan
dP
olan
dsold the wrong product
A pay rise 46 54 44 64 55 50 70 72 67 64 53 37
A better retirement plan pension H
unga
ryH
unga
ry27 32 25 33 29 26 42 35 39 44 33 32 match from my employer
Other 4 2 1 1 2 2 3 3 2 U
nite
d3 0
Uni
ted
Stat
esSt
ates
Donrsquot know 17 9 16 10 10 12 3 8 8 5 3 17
Not applicable - I already have 3 3 4 2 2 1 1 1 2 2 3 sufficient savings Ca
nada
Cana
da
Chin
aCh
ina
Chart 11 A majority of younger employees do not have a written plan for retirement Q Which of the following best describes your retirement planning strategy
Japa
n Ja
pan
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
I have a written plan 7 18 10 9 6 8 6 5 13 10 8 4
I have a plan but it is not written 24 47 37 25 23 31 29 31 37 44 55 24
down
I do not have a plan 61 32 51 61 62 55 62 58 45 42 34 61
Donrsquot know 7 3 3 5 8 6 3 6 4 4 3 12
41 | The Young Pragmatic and Penniless Generation
Chart 12 For young employees friends and family are the leading source of retirement savings information Q And which of these sources (of information) is most important to you
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
Bank adviser 6 11 19 5 25 5 7 4 3 17 10 2 N
ethe
rlan
dsN
ethe
rlan
dsProfessional financial adviser 12 22 10 12 10 19 19 22 21 25 19 10
Insurance agent spokesperson 3 10 2 3 1 3 6 2 3 0 3 2 G
erm
any
Ger
man
yInsurance company website 3 1 3 2 4 4 2 2 1 3 1
Personal finance websites online 8 5 7 8 5 4 10 8 12 6 10 8 retirement planning tools Sw
eden
Swed
enPersonal finance media 2 2 2 2 2 6 3 1 2 1 6 2
Government website 7 1 3 6 U
nite
d5 2 3 3 2 3 7 1
Uni
ted
Kin
gdom
Kin
gdom
Bank website 2 3 3 2 1 0 3 2 1 6 3 3
My employer 12 8 4 9 4 7 5 12 8 5 4 1 Fr
ance
Fran
ceAccountant 2 6 4 4 1 3 1 3 5 5 1 3
Lawyer 2 3 1 2 2 8 4 2 1 2 2 0 Sp
ain
Spai
nFriends and family 21 22 30 28 24 26 18 24 26 20 25 24
None of these P
olan
dP
olan
dNot applicable 21 7 16 18 19 13 17 15 14 9 5 41
Hun
gary
Hun
gary
Chart 13 Most young workers feel their employer should provide some kind of pension Q In the future what if anything should employers do to help people plan for retirement
Uni
ted
Uni
ted
Stat
esSt
ates
Cana
daCa
nada
Chin
aCh
ina
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 Ja
pan
Japa
n Employers should be required to 24 43 20 40 21 26 20 28 37 34 20 30 contribute to workersrsquo pensions
Employers should be required to make a pension available but not to 12 13 7 17 20 15 15 4 11 14 22 5 contribute into it
Employers should not be required to provide pensions but should 15 9 12 8 9 8 11 6 11 9 9 11 provide information on how to plan for retirement
Employers should provide a range of flexible benefits and 13 18 18 16 15 27 25 28 21 22 45 12 allow individuals to choose which benefits they actually want
Nothing ndash it should be left to individual employees to take care 2 2 5 1 4 3 3 5 6 5 1 9 of themselves
Nothing ndash it should be left to the government to take care of its 2 5 5 2 5 8 15 14 1 4 0 4 citizens
Donrsquot know 30 10 32 17 27 12 12 15 13 13 3 29
The Young Pragmatic and Penniless Generation | 42
Chart 14 Workplace pensions are relatively low down in young workersrsquo priorities when choosing a job Q How important to you would the following workplace benefits be if you were choosing your next job
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsBasic salary 86 93 88 91 88 92 90 94 90 93 96 94
Holiday entitlement 87 94 89 91 92 94 91 94 93 94 96 91 G
erm
any
Ger
man
yOvertime and bonus pay 86 93 87 88 89 90 89 94 90 91 97 90
Location of workplace 88 91 86 92 89 90 89 92 93 93 92 86 Sw
eden
Swed
enMedical health insurance 73 92 84 65 86 87 88 87 93 94 98 83
Opportunities for career progression 86 91 81 90 90 94 91 94 92 91 96 81 U
nite
dU
nite
dAccess to a workplace retirement 85 85 81 82
Kin
gdom
78 84 80 78 84 86 93 74 K
ingd
omplan with employer contributions
Access to good training provision 85 87 85 88 86 91 85 93 86 90 95 74 Fr
ance
Fran
ceFlexible working hours 79 87 58 86 81 89 81 87 91 91 92 57
Life insurance 72 75 79 69 80 82 Sp
ain
84 80 81 88 93 74 Sp
ain
(death in service benefits)
Phased retirement or other employer programs providing for 74 54 75 71 72 81 76 74 76 81 91 65
Pol
and
Pol
and
a transition into retirement
Ability to work past the normal 68 57 64 65 64 74 72 65 74 76 80 70 retirement age H
unga
ryH
unga
ry
Access to a workplace retirement 62 74 61 68 59 77 61 47 68 74 89 65 plan without employer contributions U
nite
dU
nite
dSt
ates
Stat
esEmployee share plans 50 72 54 65 59 73 61 51 64 73 91 55
Access to creche help with the 67 75 64 56 69 79 75 83 58 69 89 68 cost of childcare Ca
nada
Cana
da
Opportunities for foreign travel 53 54 60 55 50 71 58 66 57 61 79 37
Company car 51 46 45 47 49 63 51 49 36 49 69 Ch
ina
39 Ch
ina
Japa
n Ja
pan
Chart 15 Young workers think the state pension will need to be reformed Q With the cost of government pensions becoming a greater concern as people live longer which if any of the following do you think
the government should undertake
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
The government should reduce the overall cost of state pension 15 33 16 15 16 20 28 22 21 26 30 16 provision by reducing the value of individual pension plans
The government should increase overall funding available for the 12 21 30 22 14 34 19 26 21 18 29 10 state pension through raising taxes
43 | The Young Pragmatic and Penniless Generation
he government should take a alanced approach with some 27 26 12 30 28 23 24 16 34 31 38 41 eductions in individual payments nd some increases in tax
he government should not do nything State pension provision 7 2 12 5 3 4 3 3 5 4 0 5 ill remain perfectly affordable in he future
onrsquot know 38 19 29 29 39 20 26 34 19 21 4 28
Net
herl
ands
art 16 Products which protect against investment risk are the most important to young workers ( interested) Thinking about the types of financial products you could purchase to help provide you with security in retirement on a scale of 1 to 5
how interested are you in the following options G
erm
any
Swed
en
Uni
ted
Kin
gdom
ase 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 Fr
ance
100 100 100 100 100 100 100 100 100 100 100 100
product providing a guaranteed etirement income stream or 75 81 73 76 74 83 78 76 87 85 94 69
Spai
nifetime income in retirement
product which protects my 74 79 73 76 72 82 77 74 84 86 94 65 etirement income against inflation P
olan
d
product which guarantees that I 72 82 73 78 75 81 76 73 86 86 90 67 onrsquot lose my initial investment H
unga
ry product which helps meet the ost of long-term care if I become 74 79 74 77 70 79 76 71 86 85 84 66
Uni
ted
nable to look after myself St
ates
product which protects my capital 71 81 71 76 68 76 77 73 84 83 93 65 rom poor investment returns Ca
nada
product which generates a etirement income and allows 69 78 71 75 68 81 77 72 84 86 94 70 e to take a lump sum from the
Chin
anvestment should I need to
product where the annual 66 78 68 75 72 79 77 70 85 86 87 64 anagement charges are kept low Ja
pan
product which enables me to eep some control over how my 71 73 70 75 72 80 75 69 88 85 91 63 avings are invested during my etirement
product which manages the sset allocation so that I am never 68 70 67 73 66 76 71 67 80 83 95 60 xposed to a level of risk Irsquom not omfortable with
product which continues to rovide a retirement income to my 74 78 71 75 73 81 79 73 86 82 94 60 pouse in the event that I die first
product which protects my family gainst having to pay estate taxes 73 76 71 74 75 81 75 69 82 82 89 56 hen I die
product which locks in investment 72 71 63 73 64 71 59 56 81 84 89 61 eturns during the good years
Tbra
Tawt
D
ChQ
B
Arl
Ar
Ad
Acu
Af
Armi
Am
Aksr
Aaec
Aps
Aaw
Ar
The Young Pragmatic and Penniless Generation | 44
Aspiring savers unable to meet their savings goals can be Young employees can meet their retirement goals and turned into habitual savers with better educational support aspirations with access to flexible financial products which advice and information suit the life they lead The survey reveals that a significant percentage of younger Todayrsquos young employees require flexible savings products
employees (47) do not know if they are on course to achieve such as more portable retirement benefits and other workplace
their desired retirement income ndash a lack of insight into the savings offerings which move with them between employers
future which may contribute to savings inertia Addressing and across different life stages Young employeesrsquo employment
this shortfall many young employees express an interest in patterns are different to those of previous generations
financial education and advice Fully 26 say that lsquobetter and The survey revealed that 39 are planning to look for a new
more frequent information about my retirement savingsrsquo would job in the next 12 months compared to 29 of all employees
encourage them to save more for retirement 23 cite lsquoaccess and 31 of young employees are thinking about quitting their
to a professional advisor with personal recommendationsrsquo and jobs At the same time young employees place a high value
22 want lsquofinancial education so I am more aware of what I on occupational benefits with 87 believing a workplace
need to do for myselfrsquo retirement plan with employer contributions would be an
important factor when choosing their next job
Tellingly almost a quarter of young employees (24) cite
friends and family as the most important source of information These dual needs of workplace retirement plans and high levels
in choosing how to save for retirement which suggests that of labor mobility can be resolved with a more flexible range of
employers and professional financial services companies are employer benefits A third (33) of young employees would
either not providing appropriate support or are not providing be encouraged to save for retirement by matched retirement
support in a manner that is perceived to add value to these contributions from their employer Again clarity and insight are
employees Given the severe long-term repercussions themes with 24 stating that access to simpler investment
of poor retirement readiness it is essential that employers products would increase their propensity to save Finally there
and retirement companies make haste in filling this gap is a leading role for government to play through the creation of
stable long-term financial and taxation policy Among young
employees 34 stated that more generous tax breaks on
long-term savings and retirement plans would encourage
them to save
The Young Pragmatic and Penniless Generation | 4
Introduction Todayrsquos twentysomethings are young but hardly carefree At a time in life when previous generations built a career and laid the foundations for a secure future many of todayrsquos young workers face unprecedented financial challenges Student debt uncertain employment prospects high housing costs the potential support of elderly parents and receding government retirement benefits are just a few of the economic and financial uncertainties that undermine their ability to plan and save for their retirement At a time in life when savings have the longest time horizon for growth these challenges work against young workersrsquo future retirement readiness
5 | The Young Pragmatic and Penniless Generation
The structure and methodology of this report specialized public policy interventions Thus the research reflects
The Young Pragmatic and Penniless Generation polled employees views of the mainstream working population
and retirees in 12 countries Canada China France Germany
Hungary Japan the Netherlands Poland Spain Sweden the A guide to this report United Kingdom and the United States These countries were The reportrsquos conclusions and recommendations flow from an
selected on the basis of having distinctive retirement systems examination of todayrsquos young employees in the context of older
as well as varying demographic and aging trends i and retired employees
bull Par t 1 of this report explores the financial pressures that Respondents were interviewed using an online panel survey young people face from unemployment intermittent
in their native language ii in January and February of 2013 employment and extended full-time education
The sample comprised 10800 employees including 2722 people bull Par t 2 reviews the savings outlook including young employeesrsquo between the ages of 20 and 29 and 1200 retirees The 12 attitudes toward saving expectations for retirement income
countries surveyed represent employees who cumulatively have and retirement age and perceived responsibilities toward
access to around 85 of the worldrsquos private retirement assets iii parent care
(excluding government retirement benefits) bull Par t 3 examines some of the potential savings obstacles such as household economics and the income position of
Issues covered included attitudes toward retirement the individual employee and the importance of advice and
preparedness the role of government and employers in the education in altering youth perceptions of financial priorities
provision of retirement benefits and the impact of the financial bull Par t 4 explores how to encourage young people to save and crisis on attitudes to investment risk and retirement planning the role of employers in this
The survey did not include the self-employed unemployed
or long-term incapacitated since each of these groups faces The final part sets out recommendations for improving the
specific retirement planning challenges which may require retirement readiness of this important group within society
The Young Pragmatic and Penniless Generation | 6
Part 1 Young people at risk in an uncertain world As societies enjoy the benefits of longer life expectancy people will need to work harder to secure a comfortable retirement This will mean saving more during working life and a redefinition of how to approach retirement When it comes to achieving this important life goal however some groups are more at risk This report examines one such group in detail young employees at the beginning of their working life
7 | The Young Pragmatic and Penniless Generation
Countr y Median Income
lsquo(nearest 000) Married Undergrad degree or more Dependent children (any)
All 20-29 year olds $27500 25 53 25
Netherlands $37000 17 39 20
Germany $38000 33 18 27
Sweden $39000 16 30 32
United Kingdom $48000 24 53 24
France $28000 23 66 26
Spain $23000 13 54 25
Poland $13000 38 57 28
Hungary $6000 31 34 16
United States $43000 26 58 27
Canada $51000 36 55 27
China $18000 31 89 30
Japan $37000 12 63 11
Who are younger employees are also more likely than average to be single and much less
This report defines younger employees as people between likely to have children A quarter are married compared to an
20 and 29 years of age a group that belongs to the Millennials average of 64 for the generation now in their 50s
generation born between 1980 and 2000 This group differs
widely among countries although there are clear trends Education levels vary across the countries included in this research
Many have been in the labor market just a few years after a long due to differences in higher education systems (Chart 1) Overall
period of higher education Unsurprisingly median household those aged 20-29 were more likely than the average respondent
incomes are lower around $27500 according to this research to have at least an undergraduate degree The increasing
compared to an overall median of $46000 Twentysomethings prevalence of education has both positive and negative impacts
Chart 1 A portrait of younger employees Q Which of the following reflects your annual household income before taxes
Q What is your marital status
Q Please choose from the following list the highest level of educational or professional qualification you have
Q How many children do you have who are financially dependent on you Please include all children and stepchildren
Why are young people at risk Such changes will not be achieved easily in the current climate
Todayrsquos young people face a challenging set of circumstances The global financial crisis of 2007-8 not only created a need
An aging society means fewer employees supporting more for long-term structural retirement reforms it also led to the
retirees which is profoundly affecting how societies fund more immediate menace of historically high levels of youth
retirement In most of the countries surveyed lsquotraditionalrsquo unemployment The International Labour Organization (ILO)
retirement provision such as government retirement benefits estimated that in 2013 unemployment affected 73 million young
and other forms of social security or employer-sponsored people aged 15-24 worldwide representing more than 126
retirement arrangements like defined benefit company of all young people iv Across the EU 228 of people under 25
retirement plans are already subject to long-term reforms were unemployed in 2012 and in Spain the figure was 53 v
These reforms will reduce the value of future entitlements It is worth noting that the study is conducted among those who
by lowering retirement income benefits and raising the age are currently employed (part- or full-time) so the findings do not
of retirement and are likely to begin to take full effect from fully take into account the significant number of unemployed
the middle of this century just as the current generation young people
of twentysomethings enters retirement Consequently the
retirement prosperity enjoyed by todayrsquos Baby Boomers will not
be shared by subsequent retiring generations unless there is a
major change in their savings behavior
The Young Pragmatic and Penniless Generation | 8
13
4
16
3
Chart 2 Youth unemployment in 2005 and 2012 across Aegon survey countries (excluding China)
60 1
24
14
3
2005 2
06
2012
23
8
45
15
2
81
19
4
30 2
81
86
79
15 9
4
95
37
8
0 2
65
y
Japan
Spain
19
7
Canad
a
Fran
ce
Poland
Germ
any
Hunga
r
Sweden
OECD tota
l
Nether
lands
53
2
United S
tate
s
United K
ingdom
22
Note Youth unemployment rate of youth labour force (age 15 - 24) vi
23
7
12
2
21
11
3
16
2
The problems of high levels of youth unemployment and economic uncertainty affect those with jobs as well as those without
as they breed lower levels of job security and downward pressure on wages They also have a significant impact on the psychology and
confidence of younger people including those in work and their confidence in their short-term and retirement finances As the survey
findings reveal most young employees expect to find themselves worse off than their parentsrsquo generation when they enter retirement
(Chart 3)
Chart 3 The majority of young employees believe that they will be worse off in retirement compared to their parents Q Do you think that future generations of retirees will be better off or worse off than those currently in retirement
Base 20-29 year olds
Donrsquot knowBetter off
8 13
Total Respondents
2722
20 About
the same
59
Worse off
9 | The Young Pragmatic and Penniless Generation
Another major influence on the ability of young employees to save for retirement is the growth of higher education One positive
is that college graduates are more likely to benefit from lower unemployment rates fare better during economic downturns and
experience higher incomes across their lifetime supporting aspirations like home ownership vii and helping to sustain long-term
savings and increased levels of retirement preparedness (Chart 4)
Chart 4 Graduates are likely to enjoy a greater sense of retirement preparedness Q Thinking about how much you are putting aside to fund your retirement are you saving enough
Base All lsquovery prepared for retirementrsquo
30 27
17 16Postgraduate degree or qualification
College degree University degree Some college or trade school
8 High school graduate
1 Below high school graduate Other
Conversely full-time education delays entry into the labor Why is this group of young employees important arket causing a loss of several years of full-time earnings By the middle of the century todayrsquos 20-29 year olds will
otential Moreover ballooning levels of student debt may have led the world economy through an economic recovery
ignificantly delay the onset of post-graduation saving and dramatic demographic shifts during a period of greater
etween 2004 and 2012 for example student debt in the uncertainty for modern retirement systems and other issues
nited States tripled to $966 billion nationwide The effect In developing countries such as China this group will be more
f this is that todayrsquos younger employees must take greater affluent than their parents but still need to deal with the
ersonal responsibility for their savings a challenge in the consequences of a rapidly aging population and an economy
urrent economic and financial circumstances which has passed its phase of rapid growth
For all of their challenges however this group of young people
represents the biggest opportunity to change societal savings
behaviors for the better The Aegon Retirement Readiness Survey
2013 provides insights into how best to achieve this through a
greater understanding of the grouprsquos outlooks and savings habits
m
p
s
B
U
o
p
c
The Young Pragmatic and Penniless Generation | 10
45
29
20
6
50
24
21
6
56
19
21
4
46
27
21
6
Better off About the same
Worse off Donrsquot know
All work
ers
20-29 ye
ar old
s
Male 2
0-29 ye
ar old
s
Fem
ale 2
0-29 ye
ar old
s
Chinarsquos young employees bucking the gloomy trend optimistic that their economy will continue to expand over
A key finding of this yearrsquos Aegon Retirement Readiness the next 30 years Concerns about the sustainability of
Survey is that Chinese employees are far more confident growth remain however Just 37 of Chinese 20-29 year
and optimistic about their financial future than employees olds believe that the Chinese economy will improve over
in other countries This is also true of younger employees the next 12 months ndash indeed 2013 will see the economyrsquos
Of those Chinese aged 20-29 half (50) believe that they slowest expansion since 1990 x Long term Chinarsquos rapidly
will be better off in retirement than those currently in aging population makes creating a comprehensive and
retirement Younger Chinese men are the most optimistic sound retirement system an urgent priority xi Coverage has
with 56 believing that they will be better off expanded in the past 10 years with reforms such as the
introduction of the Enterprise Annuity in 2005 yet it is still
This optimism is relatively justified Since 1980 Chinese GDP not clear how China will build a universal retirement system
per capita has increased thirty-fold from $193 to $6091 across both the government-sponsored and private sectors
in 2012 viii While this dramatic increase has not benefitted However the success of reforms carried out to date suggests
all Chinese equally ndash by the Chinese governmentrsquos measure that tax incentives and efforts to improve awareness are
99 million rural Chinese live in poverty ix ndash huge progress required as part of any long term solution
has been made and young people in China are generally
Chart 5 Chinarsquos younger employees are confident of a better retirement Q Do you think that future generations of retirees will be better off or worse off than those currently in retirement
Base Respondents in China
11 | The Young Pragmatic and Penniless Generation
Part 2 The savings outlook of young employees This chapter explores the financial behaviors and savings gaps and needs of 20-29 year olds through their attitudes toward financial issues the wider economy and the savings required for a comfortable retirement
The Young Pragmatic and Penniless Generation | 12
75
21
4
69
27
4
64
31
4 5
7
36
7
20-29
30-39
40-49
50-59
44
40
16
NET Low Index (0-5)
NET Medium Index (6-7)
NET High Index (8-10)
60-69
Retirement readiness and young employees However many young employees have concerns about achieving
Retirement is seen as a major life stage by young employees this Over a third (38) are pessimistic that they will not have
They typically expect to spend an average 20 years of their lives enough to live on in retirement and 44 are pessimistic about
in retirement a definition of retirement that is consistent across being able to choose when they retire Furthermore 28 have
all working age groups Retirement conjures broadly positive made no plans at all for their retirement which may help explain
associations Fully 63 of employees in their twenties aspire some of these concerns Health worries are less of an issue with
to travel during retirement 39 see it as a period of leisure 52 being optimistic that they will enjoy good health in old age
and 30 associate it with freedom The need to plan and save although 20 believe that they will not which is perhaps related
for this phase of life is also widely accepted Half (50) of to the 17 who associate retirement with ill health in general
employees in their twenties are aware of the need to save and
64 feel a high or very high degree of personal responsibility Overall 75 of employees in their twenties achieved a low
to ensure sufficient income for retirement retirement readiness score of 0-5 on the Aegon Retirement
Readiness Index (please refer to the glossary and Appendix 1 for
an explanation of the Index) The percentage of employees with a
low score of 0-5 drops with each increase in age group and is 44
among those in the lsquoat retirementrsquo group of 60 to 69 year olds
Chart 6 Aegon Retirement Readiness Index scores for employees across age groups For more information on the ARRI see page 36
Base All aged 20 - 69
Life stage and savings attitudes Getting married and starting a family are two such events
he Retirement Readiness Index reveals that retirement Of employees in their twenties 25 are married and
reparedness is to some extent age- and life stage-related 25 have children whereas for those in their 30s 54 are
hart 6) For younger employees the idea that retirement is married and 56 have children representing a major shift
r awayrsquo combined with lower earnings and other spending toward parenthood
riorities (such as higher education or purchasing a house)
an be powerful obstacles to saving for retirement Thus while Encouragingly while young employees are less likely to
5 of all employees say that they lsquoalways make surersquo that they have started saving for retirement many see themselves as
re saving for retirement just 25 of 20-29 year olds do so future lsquoaspiringrsquo savers Fully 41 intend to save in the future
t present over half (57) of 20-29 year olds are not saving compared to 27 of all employees and only 7 do not intend
r retirement compared to 46 of all employed adults to save for retirement This large group of aspiring savers
ven in China where 44 are always saving for retirement who are committed to the idea of putting money aside for
st 32 of 20-29 year olds do so retirement challenges the view that young people are unwilling
to save Furthermore since converting these young employees
his life cycle effect can be seen in numerous ways At the from aspiring savers to regular savers may depend on the
utset of adult life employees experience lower income and right economic conditions and appropriate financial incentives
igher spending as they prioritize and fund life events with a helping them is a major opportunity for governments and
ignificant impact on their ability or desire to save for retirement employers
T
p
(C
lsquofa
p
c
3
a
A
fo
E
ju
T
o
h
s
13 | The Young Pragmatic and Penniless Generation
35 25 20 19 12 9 27 41 7 7
I always make sure I only save for I am not saving for I am not saving for I have never saved that I am saving retirement occasionally retirement now although retirement though for retirement and for retirement from time to time I have in the past I do intend to donrsquot intend to
All 20 to 29 year olds
NET Low Index (0-5)
NET Medium Index (6-7)
NET High Index (8-10)
Chart 7 Younger employees are much more likely to aspire to save for retirement but the majority are not saving Q Which of the following best explains your approach to saving for retirement This can include money you contribute to any
long-term investment including pensions stocks and shares investment-linked insurances property etc
Other findings support the assertion that younger savers This can be seen in Chart 8 More 20-29 year olds claim that
are open to increasing their retirement savings Over a third they are not likely to be saving for retirement by any means
(37) of 20-29 year olds feel lsquovery responsiblersquo for ensuring (17 against 12 for all adults) and are generally less likely
a sufficient retirement income Note however that this does to use any of the savings products mentioned Revealingly
not translate into better developed financial plans and savings 20-29 year olds are far less likely to name lsquogovernment benefits
strategies Only 7 in this age group feel they have lsquowell in retirementrsquo as a source of retirement income although almost
developedrsquo personal retirement plans and 33 say they are all respondents have some such entitlement This may be due
lsquohardly saving anythingrsquo for retirement Clearly awareness of the to unawareness of government benefits and or greater
retirement situation does not translate into actual retirement scepticism about governmentsrsquo ability or willingness to
planning activity provide for them in old age
The Young Pragmatic and Penniless Generation | 14
Chart 8 Younger people are more likely not to be using any means of retirement savings Q Which financial means if any are you currently using to prepare for your retirement
33 Savings accounts 31
36 Government pension social security 24
25 Defined benefit plan 21
22 Private pension 17
23 Defined contribution plan 15
20 Life insurance 15
14 Stocks 10
14 My home 9
12 Mutual funds 8
9 Inheritance 7
9 Bonds 7
8 Investment property 7
5 Employee stock purchase 5
5 Investment insurances (annuities) 4
4 Long-term care insurance 4
6 Annuities 3
My business 2 3
Reverse mortgage 1 1
Other 3 2
12 None nothing 17
6 Donrsquot know 10
All 20 to 29 year olds
Leisure
Freedom
Far away
Insecurity
Enjoyment
Poverty
Ill health
Boredom
Opportunity
Dependent on others
Loneliness
Tired
Excitement
None of the above
Donrsquot know
Retirement associations What does the younger generation feel about retirement and want to get out of it Perhaps unsurprisingly 20-29 year olds are more
likely to be negative than older respondents associating retirement with boredom loneliness and ill health They are also far more
likely to believe retirement is lsquofar awayrsquo which is likely to be a barrier to retirement saving
15 | The Young Pragmatic and Penniless Generation
Chart 9 The younger generation has more negative associations with retirement Q Which if any of the following words do you most associate with retirement
44 Leisure 39
36 Freedom 30
17 Far away 26
25 Insecurity 25
25 Enjoyment 21
19 Poverty 19
15 Ill health 17
9 Boredom
13
16 Opportunity
13
10 Dependent on others
12
9 Loneliness
11
0
r olds
7Tired
1
6Excitement
6
2None of the above
1
2Donrsquot know 2
All 20 to 29 yea
Aspirations and responsibilities for retirement Income levels in retirement ung people have similar retirement aspirations to the general A high proportion (47) do not know if they are on course
pulation for example travel (63) spending time with to achieve their retirement income goal Combined with the
iends and family (61) and pursuing new hobbies (52) high level of financial responsibility young employees expect
r them however retirement also includes the responsibility of to assume in retirement it is clear that people not only need
ring for others Two-fifths (40) believe that lsquoadult children to build much greater awareness of what kind of financial
retirees should help through providing financial support to pressures they are likely to face in retirement but also require
eir parents if neededrsquo and 28 believe that this will affect greater support in establishing realistic retirement income
em directly in retirement through providing financial support targets which are capable of meeting their needs
their parents A fifth (21) also expect to spend some of
eir retirement caring for other family members while just
donrsquot expect to provide for anyone compared to 40 of all
ployees Clearly todayrsquos young employees anticipate serious
ancial responsibilities in their retirement
Yo
po
fr
Fo
ca
of
th
th
to
th
30
em
fin
The Young Pragmatic and Penniless Generation | 16
Chart 10 Many young employees do not think that they are on course to achieve target retirement income Q Do you think you will achieve this income [your estimated income needed in retirement]
Base 20-29 year olds
Yes I am on course to achieve my retirement
income
16
47
12
16
10
I donrsquot know if I am on course to achieve my
retirement income
No I am on course to achieve around
one-quarter (25) of
No I am on course to achieve around half of my
retirement income
No I am on course to achieve around
three-quarters (75) of my retirement income
532
China
586
Japan
United S
tate
s
628
Poland
635
Canad
a
636
Hunga
r
638
y
Fran
ce
645 647
Spain
Sweden
649
United K
ingdom
651
Germ
any
653
Nether
lands
666
my retirement income
When will young people retire Media reports about the need to raise the age of retirement appear to have influenced younger employees Fully 44 of 20-29 year
olds do not expect to be able to choose their retirement date although the younger generation do expect to retire at a similar age
to older employees 63 This varies considerable by country In the Netherlands young employees expect to retire eight years later
than those in Japan Some countries such as China and Japan have surprisingly low expected retirement ages suggesting that young
employees may benefit from having a better understanding of when government or workplace retirement benefits kick in
Chart 11 Young people in most countries expect to retire before 65 Q At what age do you expect to retire from all paid employment
Base 20-29 year olds
Despite expecting to retire at the same age as their parents younger employees are more open to a transition into retirement
reflecting their more flexible outlook toward work Around half (51) are happy to change the way they work in some way as they move
into retirement Just 8 expect to keep working as they do currently
17 | The Young Pragmatic and Penniless Generation
Part 3 What is holding young employees back Insights into what young employees feel is holding them back from saving or saving more can be used to encourage younger people to adopt more positive savings behaviors This chapter explores the attitudes of young employees toward the financial obstacles they face and asks what actions they have taken in preparation for retirement The findings reveal that while the majority lacks adequate planning for their retirement needs financial shortcomings are only part of the stor y Spending preferences play a key role in the savings gap of advanced economies
The Young Pragmatic and Penniless Generation | 18
Lack of money to invest 37
16 The uncertain economic environment
7 Fear of poor investment returns over the coming years
6 I donrsquot trust the financial services industry
6 I donrsquot know how to go about investing for the long-term
4 oncerns about unstable currencies currency fluctuations
4 Complexity of investment products
4 I canrsquot afford to take financial advice
3 The fees charged by financial services companies
3 I donrsquot see the need to save for the long-term
Other 2
Donrsquot know 8
A pay rise
More generous tax breaks on long-term savings and pensions products
A better retirement plan pension match from my employer
Better and more frequent information about my retirement savings
Simpler investment products that I can understand with less jargon
Access to professional financial advice so that I have personalized recommendations on what steps I need to take
Access to financial education so that I am more aware of what I need to do for myself
Better legal protection in case I am sold the wrong product
Other
Not applicable - I already have sufficient savings
Donrsquot know
Obstacles and incentives to saving
Chart 12 Younger employees feel they donrsquot have money to invest for retirement Q What is the single biggest obstacle to you saving for retirement right now
Base 20-29 year olds
C
What is the single biggest obstacle preventing twentysomethings that they rank pressing and desirable life goals such as marriage
m saving for retirement Not having enough money to invest starting a family vacations and other leisure activities above the
top of the list cited by over a third (37) although this figure need to plan for retirement This suggests the savings gap is
ops to just 6 in the emerging market of China where mean preference-driven
omes are the lowest by far ($18000) suggesting that lack of
sh may be partly a state of mind Young employees in China The biggest obstacle to retirement savings cited by one-eighth
actually more worried about local concerns such as economic (13) of respondents is either not knowing how to invest for the
certainty (29) and currency instability (15) Behavioral long-term or the complexity of investment products charges and
ance has an impact too with the way young employees frame fees Ready solutions to this include improving young employeesrsquo
eir financial priorities creating its own obstacles to saving financial literacy about retirement planning and creating easier
many as 57 of 20-29 year olds believe that saving for access to professional financial advice
tirement is important but not a current priority suggesting
fro
is
dr
inc
ca
are
un
fin
th
As
re
19 | The Young Pragmatic and Penniless Generation
Chart 13 More money would incentivize young employees to save for retirement Q Which if any of the following would encourage you to save for retirement
Base 20-29 year olds
57 A pay rise
More generous tax breaks on long-term savings and pensions products
34
A better retirement plan pension match from my employer
33
Better and more frequent information about my retirement savings 26
Simpler investment products that I can understand with less jargon 24
Access to professional financial advice so that I have personalized recommendations on what steps I need to take 23
Access to financial education so that I am more aware of what I need to do for myself 22
Better legal protection in case I am sold the wrong product 16
Other 2
Not applicable - I already have sufficient savings 2
Donrsquot know 10
Chart 14 Very few younger employees have a written plan for retirement Q Which of the following best describes your retirement planning strategy
Base 20-29 year olds
5 Donrsquot know I have a
written plan
8
34 I have a plan but it is not
52 written down
I do not have a plan
Turning to incentives greater remuneration predictably tops a list Retirement planning of what would encourage 20-29 year olds to save for retirement Retirement planning is essential to adequate retirement saving
More tellingly a third (33) would like their employer to provide although it is somewhat lacking in todayrsquos younger employees
a better retirement plan into which both parties contribute Over half (52) have no retirement planning strategy at all
Better information and simple products would also help more and only 8 have noted down their retirement strategy
people to save A quarter (26) would be encouraged to save by
better and more frequent information about retirement savings Nevertheless the respondents polled believe that the current
while a similar number (24) want simple investment products global economy makes retirement planning increasingly
that are easy to understand As with the previous question a important ndash 71 agreed with this statement It is clear from this
lack of investment knowledge and the complexity of investment that young people between the ages of 20 and 29 do not lack
products are revealed as obstacles to savings the will to save they lack the opportunity
The Young Pragmatic and Penniless Generation | 20
Part 4 Creating the right conditions for young employees to save How may young employeesrsquo obstacles to saving be overcome For retirement readiness this will be a defining question of the early twenty-first centur y ndash and an extremely challenging one given the number of serious issues affecting younger employeesrsquo finances What was learned in the previous chapter about encouraging young employees to save is a start This chapter examines which areas and triggers to saving can be unlocked and whether government employer or individual should take most responsibility
21 | The Young Pragmatic and Penniless Generation
Friends and family
Professional financial adviser
17
24
Bank adviser 9
Personal finance websites online retirement planning tools
My employer
Government website
4
8
7
Insurance agent spokesperson
Accountant
3
3
Personal finance media 3
Lawyer
Bank website
3
2
Insurance company website
Donrsquot know
2
15
Information and advice on retirement saving strong theme revealed by our findings is that younger This finding is remarkably consistent across the countries
mployees want more information on savings products and sur veyed despite significant differences in market makeup
etter access to advice The largest share 24 (compared although some differences exist For instance a quar ter
o 17 for all employees) finds friends and family to be the (25) of young employees in France turn to bank advisers
ost important source of advice followed by professional for financial information nearly triple the number among all
dvisers (17) and bank advisers (9) That young employees young people (9)
urn to friends and family first suggests an unmet need for
rofessional financial advice This is both a challenge and an
pportunity for the financial ser vices sector
hart 15 For young employees friends and family are the leading source of retirement savings information Which of these sources (of information) is most important to you
ase 20-29 year olds
A
e
b
t
m
a
t
p
o
CQ
B
What is the role of the workplace in retirement planning Does this influence what retirement benefits younger
In response to shifting employment patterns todayrsquos younger employees expect from their workplace Certainly a majority
employees are less loyal to their employers than older workers favor workplace retirement plans with 61 believing that these
Fully 39 of 20-29 year olds are planning to look for a new job should be a fundamental part of pay (although this is lower
in the next 12 months compared to 29 of all workers and than for employees overall) and just 4 feel that retirement
31 frequently think about quitting their jobs Strikingly while planning should be left entirely to individuals
53 of all workers plan to stay with their current employer
until retirement just 37 of 20-29 year olds say this However there is evidence of a slight shift in perceptions
Younger workers are less likely to want workplace retirement
Doubtless much of this is because younger workers are more plans over other factors Of those who want employer
mobile and have more opportunities Another trigger to lower retirement plan contributions only 46 wanted this even if
employer loyalty may be the expectation of holding more jobs it reduced benefits and 35 (compared to 43 of all workers)
and even pursuing multiple careers over a working lifetime if it cut jobs
The Young Pragmatic and Penniless Generation | 22
Donrsquot know Employers should be
required to contribute to workersrsquo pensions
5 Nothing ndash it should be left to the government to take 18
care of its citizens 28
4 Nothing ndash it should be left to individual employees to
take care of themselves
13
22
Employers should provide a range of flexible benefits
and allow individuals to choose which benefits they
actually want
10 Employers should
be required to make a pension available but not
to contribute into it
Employers should not be required to provide pensions but should
provide information on how to plan for retirement
Chart 16 Most young workers feel that their employer should provide some kind of pension Q In the future what if anything should employers do to help people plan for retirement
Base 20-29 year olds
Are other workplace benefits more important Younger workers were asked to rate the importance of various workplace benefits The results reveal how highly they value the
elements of their compensation package Chart 17 shows that 87 of young employees believe a workplace retirement plan with
employer contributions would be an important factor when choosing their next job While retirement may be decades away for
twentysomethings 80 believe programs provide for a phased retirement are important
23 | The Young Pragmatic and Penniless Generation
Basic salary 94
93 Holiday entitlement
91 Overtime and bonus pay
91 Location of workplace
88 Medical health insurance
87 Opportunities for career progression
Access to a workplace retirement plan with employer contributions 87
Access to good training provision 86
Flexible working hours 85
Life insurance (death in service benefits) 81
Phased retirement or other employer programs providing for a transition into retirement 80
Ability to work past the normal retirement age 70
Access to a workplace retirement plan without employer contributions
67
Employee stock plans 65
Access to creche help with the cost of childcare 59
Opportunities for foreign travel 50
Company car 43
Chart 17 Workplace retirement plans are a relatively low priority for younger workers when choosing a job How important to you would the following workplace benefits be if you were choosing your next job
ase 20-29 year olds
Q
B
Regarding workplace benefits provided by employers today considered just enough to fulfill basic needs and in China a
young employees are about as likely as all workers to be offered fully formed nationwide retirement system is still some way off
retirement tools such as annual plan statements and online The future shape and affordability of these plans is debated in
tools from their employer though it is concerning that 24 do all of the sur vey countries to var ying degrees
not know if such tools are available or not Those provided are
considered helpful Younger workersrsquo views on reform are important because
changes to government retirement benefits are more likely
The role of government to affect them than any other part of the working population
The generosity of government retirement benefits varies The main concern cited by 57 is of facing less generous
considerably in the countries sur veyed In some countries such government retirement benefits than those enjoyed by their
as France government benefits are the primar y mechanism parentsrsquo generation
for funding retirement while in the United Kingdom they are
The Young Pragmatic and Penniless Generation | 24
The government should reduce the overall cost of state pension provision by
reducing the value of Donrsquot know individual pension plans
25 22
4 The government should not do anything State pension provision will
remain perfectly affordable in the future
28
21 The government should increase overall funding
available for the state pension through
raising taxes
The government should take a balanced approach with some reductions in individual payments and
some increases in tax
Chart 18 Young workers think that the government retirement system will need to be reformed Q With the cost of government retirement benefits becoming a greater concern as people live longer which
if any of the following do you think the government should undertake
Base 20-29 year olds
The younger generation believes that the government cannot What do young employees look for in a retirement product continue to provide as it does now ndash just 4 think government The sur vey findings show that young employees have
benefits will remain affordable to society However there is no reser vations about employer and government retirement
consensus on what governments should do to reform retirement benefits So what then do they want from a private savings
plan systems Over a fifth (22) think retirement entitlements product The savings product feature most valued by younger
should be cut just over a fifth (21) think governments should workers is protection against investment risk (Char t 19)
raise taxes and more than a quarter (28) think a mixture of This may be in the form of no loss of initial investment a
the two is the best solution Another quarter admits that they guaranteed income stream or protection against inflation
donrsquot know what should be done This is reasonable ndash the initial investment of those farthest
from retirement is most at risk However less consideration
is given to savings grow th through investment returns This
suggests that there is an oppor tunity to educate young
workers about the trade-off between returns and risk
management and what they stand to gain
25 | The Young Pragmatic and Penniless Generation
Chart 19 Products which protect against investment risk are the most important to young workers ( interested) Q Thinking about the types of financial products you could purchase to help provide you with security in retirement on a scale of 1 to 5
how interested are you in the following options
Base 20-29 year olds
A product providing a guaranteed retirement income stream or lifetime income in retirement 82
A product which protects my retirement income against inflation 81
A product which guarantees that I donrsquot lose my initial investment 81
A product which helps meet the cost of long-term care if I become unable to look after myself 80
A product which protects my capital from poor investment returns 79
A product which generates a retirement income and allows me to take a lump sum from the investment should I need to 79
A product where the annual management charges are kept low 78
A product which enables me to keep some control over how my savings are invested during my retirement 77
A product which manages the asset allocation so that I am never exposed to a level of risk Irsquom not comfortable with 76
A product which continues to provide a retirement income to my spouse in the event that I die first 75
A product which protects my family against having to pay estate taxes when I die 72
A product which locks in investment returns during the good years 70
The lsquodefined ambitionrsquo retirement system in This removes some of the disadvantages of leaving
the Netherlands a sustainable retirement solution retirement liabilities exclusively up to employers
for young workers (defined benefit) or employees (defined contribution)
In the Netherlands as elsewhere young workers are faced In the Netherlands this is likely to involve legislation which
with an increasing retirement age decreasing government lets retirement funds automatically adjust pay-outs and
suppor t for retirement and declining traditional defined retirement age as life expectancy changes xii
benefit employer retirement plans Reforms proposed
by the Dutch may show a way for ward for all mature and This model has garnered interest elsewhere In the
aging economies United Kingdom Pensions Minister Steve Webb expressed
interest on a more limited scale with a government
rsquoDefined ambitionrsquo proposes that risks are not taken on fully guarantee for a minimum rate of return for defined
by either employer or employee but are shared contribution retirement plans
The Young Pragmatic and Penniless Generation | 26
Recommendations Enabling young workers to save The studyrsquos findings reveal that the majority of young workers (66) are either saving consistently or aspire to start saving but face challenges including debt low pay and funding for significant life events and generational changes to the economic landscape and government and employer support If young people are to achieve a prosperous retirement their willingness to save should be met with better opportunities to save Here is what can be done by employers governments and young people themselves to address retirement planning concerns for younger adults
27 | The Young Pragmatic and Penniless Generation
Individuals Employers and governments
Determine how much income you need in retirement Auto-enroll employees into a workplace retirement plan Young people accept the need to save for retirement but donrsquot If an auto-enrollment workplace retirement plan is feasible
know how to act on that need They can become more retirement this can play a major role in getting young workers saving early
savvy simply by talking to friends and family (as do 24 of and regularly Combined with auto-escalation (the automatic
our respondents already) or employers going online to use annual increase in retirement plan contributions) and matching
retirement calculators or reading the personal finance media contributions it can lead to greater retirement readiness
Seek out a financial advisor Provide more flexible savings products through the workplace Young people are faced with life events that make it easy to Not all savings journeys start with a retirement plan particularly
feel overwhelmed by financial priorities in addition to retirement for young people who may think of retirement as lsquotoo far awayrsquo
planning Soliciting advice from a finance professional early in Employers can kick-start the savings habit in younger workers
life (17 of young employees have done so already) helps with by providing flexible easy to access and easy to understand
planning and priorities and making sense of long-term finances savings plans as a more attractive starter option
Start saving now and save consistently Make company retirement plans more portable As with all employees young people will strengthen their Young people move jobs much more often than previous
retirement readiness simply by saving regularly Today only 25 generations of employees so savings like DC retirement plans
of young people always save yet even small regular amounts need to follow employees when they change jobs
will improve retirement readiness over time
Make tax incentives more effective Ask your employer about workplace retirement savings plans All countries encourage long-term savings through tax relief but
and other retirement benefits young people often arenrsquot aware of this or donrsquot understand it
While one third (33) of young people believe that a workplace A more targeted system of tax relief could help provide clearer
retirement savings plan provides a major opportunity to start and simpler signals to younger people about the financial
saving employers often experience difficulties in engaging benefits of long-term saving
younger employees in discussions about retirement planning
The workplace is an important channel for achieving retirement Make better financial education central to the workplace readiness so be sure to max out on any employer contributions retirement offer
Young people who aspire to save may be prevented from
doing so by setting the wrong financial priorities Workplace
retirement education ndash alongside professional advice ndash can help
guide young people toward the right long-term priorities at an
earlier age in life
The Young Pragmatic and Penniless Generation | 28
29 | The Young Pragmatic and Penniless Generation
Glossary
Aegon Retirement Readiness Index (ARRI) c areer average retirement plan The ARRI assesses the relative levels of retirement A type of defined benefit plan that is based on an
preparedness of employees across different countries on a employeersquos average retirement earnings over the duration
scale from 1 to 10 The Index is based on three questions of plan membership Same as average salary plan
covering attitudes and three questions covering behaviors
defined ambition (DA) plan average salary plan A type of retirement plan in which retirement plan risks
A type of defined benefit plan that is based on an are shared between the employer and the employee
employeersquos average retirement earnings over the duration It offers greater certainty to savers around the final value
of plan membership Same as career average plan of their retirement assets than in DC plans and less
cost volatility for employers than with DB plans In the
a nnuity Netherlands Defined Ambition (DA) retirement plans are
A form of contract sold by life insurance companies that being introduced in order to help relieve the pressure on
guarantees a fixed or variable payment to the annuitant employers while still trying to provide employees with a
at some future time usually retirement All capital in the more secure retirement plan The United Kingdom too is
annuity grows tax-deferred looking at DA retirement plans as a solution
auto enrollment defined benefit (DB) plan An employer-sponsored retirement plan in which the An employer-sponsored retirement plan where the amount
employer is able to enroll an employee without that of future benefits an employee will receive from the plan is
employeersquos express authorization The employer determines defined typically by a formula based on salary history and
what percentage of the employeersquos salary or wages is years of service The amount of contributions the employer
contributed to the plan The employee is able to change is required to make will depend on the investment returns
this percentage and can opt out of enrollment in the plan experienced by the plan and the benefits promised
Contrast defined contribution plan
a uto-escalation A feature of a plan which automatically increases the defined contribution (DC) plan percentage of (retirement) funds saved from salary An employer-sponsored retirement plan such as a 401(k)
This feature generally uses a default or standard plan or a 403(b) plan in the United States in which
contribution escalation rate contributions are made to individual participant accounts
Depending on the type of DC plan contributions may be
B aby Boomers made by the employee the employer or both
A term used to refer to people generally born between
the end of World War II in 1945 and the mid 1960s The employeersquos benefits at retirement or termination of
Other generations Silent Generation - the generation born employment are based on the employee and employer
between 1925 and 1945 Generation X - the generation contributions and earnings and losses on those
born between 1965 and 1979 Millennials or Generation contributions See also 401(k) and 403(b) plan
Y - the generation born between 1980 and 2000 and often Contrast defined benefit plan
classified as the children of Baby Boomers
The Young Pragmatic and Penniless Generation | 30
401(k) plan An employer sponsored retirement plan that enables
employees to make tax-deferred contributions from their
salaries to the plan
403(b) plan An employer-sponsored defined contribution plan that
enables employees of universities public schools and
non-profit organizations to make tax-deferred contributions
from their salaries to the plan
final salary plan A type of defined benefit plan in which retirement
benefits are based on final retirement salary in the years
immediately before retirement benefits are received
Millennials A term used to refer to the people born from about 1980
to 2000 brought up using digital technology They are
often classified as the children of Baby Boomers
r etirement (or pension) plan Provides replacement for salary when a person is no
longer working due to retirement In the case of a defined
benefit retirement plan the employer or union contributes
to the plan which pays a predetermined benefit for the
rest of the employeersquos life based on length of service and
salary Payments may be made either directly or through
an annuity Retirement plan payments are taxable income
to recipients in the year received The employer or union
has fiduciary responsibility to invest the retirement plan
funds in stocks bonds real estate and other assets earn
a satisfactory rate of return and make payments to retired
workers Retirement plan funds holding trillions of dollars
are one of the largest investment forces in the stock
bond and real estate markets If the employer defaults in
the United States retirement plan payments are usually
guaranteed by the Pension Benefit Guaranty Corporation
(PBGC)
variable annuities (VA) An insurance contract in which the insurance company
guarantees a minimum payment at the end of the
accumulation period The payments may vary depending
on the financial performance of the managed portfolio
31 | The Young Pragmatic and Penniless Generation
About Aegon Transamerica Center for Retirement Studiesreg and Cicero Consulting
Aegon Transamerica Center Aegon is an international life insurance pensions and asset reg management company with businesses in over 20 markets for Retirement Studies in the Americas Europe and Asia Aegon companies employ The Transamerica Center for Retirement Studiesreg (TCRS) is
around 24000 people and serve millions of customers a division of the Transamerica Institute a nonprofit private
worldwide foundation TCRS is dedicated to educating the public on
wwwaegoncom emerging trends surrounding retirement security in the
United States TCRSrsquo research emphasizes employer-sponsored
In 2010 Aegon became a founding member of the Global retirement plans issues faced by small to mid-sized companies
Coalition on Aging which seeks to raise awareness of aging and their employees and the implications of legislative and
issues among policymakers and the general public A major aim regulatory changes Transamerica Institute is funded by
of the coalition is to transform the way we think and speak contributions from Transamerica Life Insurance Company and
about aging replacing the familiar rhetoric of lsquoproblemsrsquo with its affiliates and may receive funds from unaffiliated third-
a more positive discussion of lsquopossibilitiesrsquo and lsquoopportunitiesrsquo parties For more information about TCRS please refer to
wwwglobalcoalitiononagingcom wwwtransamericacenterorg
Cicero Consulting A leading consultancy firm serving the banking insurance and
asset management sector Cicero specializes in public policy
and communications consulting as well as global thought
leadership and independent market research Cicero was
established in 2001 and now operates from offices in London
Brussels Washington and Singapore As a market leader in
pensions and retirement research Cicero designed
and analyzed the research and contributed to the report
wwwcicero-groupcom
The Young Pragmatic and Penniless Generation | 32
Marta acebo Mark Green Patricia Plas
Paula alvarez douGlas henck scott roane
Frits bart wendel hoFMan thurstan robinson
Grace basile
lynette belFry
andrew berwick
Frans van der horst
tatsuo kai
herMan kaPPelle
Patti rowey
sarah russell
Joost van schaGen
robin boon Gaacutebor kePecs dick schiethart
bert-JaaP brons Marco keiM erik schouten
douG brooks
libby buet
kent callahan
JaiMe kirkPatrick
bas knol
roGer koch
anGela seyMour Jackson
kate sMith
renske stoker
Jeanne de cervens
dana chen
Peter kunkel
alexander kuiPers
eyleen sun
MartiJn tans
arkadiusz chMurzynski
heidi cho
brian lewis
Mike linder
GreG tucker
Mark twiGG
siMon clow siMon luke catherine wanG
robert colliGnon Jason Ma Marc van weede
catherine collinson GrzeGorz Mathea tiM willaert
wendy daniels
Michel denizot
edit drevenka
Paul Middleton
takaoh MiyaGawa
david Moulton
daniel wriGht
alex wynaendts
MacieJ zaPala
Jan driessen
kelly Fu
adrian Grace
Mark Mullin
Marcelle noltenius
stiG nybo
Peacuteter zatykoacute
vicky zeldin
Disclaimer This repor t contains general information only and does
not constitute a solicitation or offer No rights can be
derived from this repor t Aegon its par tners and any of
their affiliates or employees do not guarantee warrant
or represent the accuracy or completeness of the
information contained in the repor t
Acknowledgements
33 | The Young Pragmatic and Penniless Generation
References and notes i For a comparison of different retirement systems see lsquoPensions at a Glance 2011rsquo OECD 2011 ii As the survey was carried out online the survey results in China are based toward people living in urban areas iii ldquoPensions Marketsrdquo TheCityUK March 2013 p9 iv Global Employment Trends for Youth 2013 A generation at risk International Labour Organisation 2013 p2 v Eurostat July 2013 vi OECD Employment and Labour Markets Key Tables from OECD No 2 2012 vii The Federal Reserve Bank of New York 2012 Quarterly Report on Household Debt March 29 2013 viii World Bank ix lsquoWorld-class povertyrsquo The Economist February 27 2013
httpwwweconomistcomblogsanalects201302chinas-poor x lsquoThe Chinese slow down in char tsrsquo The Economist July 15 2013 xi lsquoChina rsquos welfare system difficult inflexible and blatantly unfairrsquo The Guardian April 23 2013
httpwwwtheguardiancomglobal-development2013apr23china-welfare-system-inflexible-unfair xii lsquo The Dutch experience with Defined Ambition pensions and the impact on companiesrsquo Aegon Global Pensions March 12 2013
httpwwwaegonglobalpensionscomenHomePublicationsNews-archiveNewsThe-Dutch-experience-with-Defined
Ambition-pensions-and-what-that-may-mean-for-companies-in-the-Netherlands-and-the-UK
shy
The Young Pragmatic and Penniless Generation | 34
Contact information HE ADQUARTER S
Aegon NV
PO Box 85
2501 CB The Hague
Telephone +31 70 344 32 10
w w waegoncom
MEDIA REL ATIONS
Telephone +31 70 344 89 56
Email gcc-iraegoncom
Countr y Index score
Germany 548
China 541
Canada 524
United States 519
The Netherlands 488
United Kingdom 486
Sweden 483
France 475
Hungar y 473
Poland 463
Spain 440
Japan 430
Total 489
Appendix 1 Aegon Retirement Readiness Index (ARRI) - technical note
Aegon Retirement Readiness Index (ARRI)-technical note 2013 Weightings (2012 in brackets) A sample of 12000 pre and post retirees was drawn from 1 Personal responsibilit y 20 (30)
twelve countries Of these 10800 (90) were pre-retirees 2 Level of awareness 30 (35)
and these were chosen for fur ther analysis of their plans 3 Financial capability Understanding 30 (25)
for retirement The Index that was developed forms an 4 Retirement planning 50 (50)
assessment of how well an individual perceives the adequacy 5 Financial preparedness 60 (60)
of his her own finances and financial awareness specifically 6 Income replacement 35 (35)
for addressing his retirement needs
Note that the weights devised to show the relative
The lsquotargetrsquo for the Index impor tance of each question in calculating the Index add to
The question on current savings activity was designated as the 225 These were then re-scaled so that a final scale of 1 to
target question (dependent variable) for predicting the level of 10 was calculated
preparedness for retirement Responses to this question were
then correlated with each of the six key questions (variables) Final scores by country below to understand which were driving the activity These weightings were multiplied by the actual scores for each
This was done because it was not felt to be correct to give respondent for each of the six Index questions and aggregated
each of the six variables described below an equal weight as to obtain a provisional score This was then adjusted to
they appeared to have quite different relationships to the give countr y scores out of 1 to 10 (A score of 1 to 10 had
target question sufficient differentiation to be used as the scale for analysis)
1 Personal responsibilit y for income in retirement
2 Level of awareness of need to plan for retirement
3 F inancial capability Understanding of financial matters
regarding plans for retirement
4 Retirement planning Level of development of plans
5 Financial preparedness for retirement
6 Income replacement Level of projected income replacement
The weighting To estimate the statistical significance of the decline in overall
scores in this yearrsquos Index is theoretically incalculable
Two things have changed from 2012 to 2013
1 C anada and China have joined the sample
2 The new countries have thus influenced the weights of
emphasis placed on the 6 variables used to calculate
the score hence the weights attached to the complex
calculation have changed
However it is noticeable that for countries which were sampled
in both time periods the mean scores for the six individual
variables have almost invariably declined and on average more
than half of them have shown a significant level of decline
In particular the question lsquoDo you think you will achieve this
incomersquo has for all countries shown a significant level of
decline We thus hypothesize that the comparative results
show a significant decline
The Young Pragmatic and Penniless Generation | 36
Net
herl
ands
Net
herl
ands
Net
herl
ands
Ger
man
yG
erm
any
Ger
man
yBase 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
Better off 7 4 23 Sw
eden
Swed
en11 5 7 8 3 11 14 50 5
Swed
en
About the same 19 18 27 23 8 19 18 13 29 29 24 21 U
ntie
dU
ntie
dU
nite
d Worse off 66 74 41 58 79 69 71 76 51 47 21 55
Kin
gdom
Kin
gdom
Kin
gdom
Donrsquot know 9 3 9 9 9 4 4 8 9 10 6 19
Fran
ceFr
ance
Fran
ce
Chart 2 Education of 20 ndash 29 year olds by country Q Please choose from the following list the highest level of educational or professional qualification you have
Spai
nSp
ain
Spa
in
Pol
and
Pol
and
Pol
and
Hun
gary
Hun
gary
Hun
gar y
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
dU
nite
d 100 100 100 100 100 100 100 100 100
Stat
es100 100 100
Stat
esSt
ates
Less than high school graduate 2 44 6 14 1 3 2 7 1 3 Ca
nada
Cana
daC
anad
aHigh school graduate 11 33 53 23 22 22 4 41 14 21 1 2
Some college or trade school 46 2 9 9 9 19 37 14 28 20 4 33 Ch
ina
Chin
aC
hina
College degree University degree 31 15 27 30 41 43 21 33 50 46 9 57
Postgraduate degree or 8 3 3 23 25 11 36 1 8 9 80 6 qualification Ja
pan
Japa
n Ja
pan
Other 2 4 1 1 1 2 0 5 0 6 2
None 0 1 1 0 1 0 0
NET Less than undergrad degree 61 82 70 47 34 46 43 66 42 45 11 37
NET Undergrad degree or higher 39 18 30 53 66 54 57 34 58 55 89 63
Chart 3 Aegon Retirement Readiness Index scores for young employees by country
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
NET Low Index (0-5) 80 64 79 81 85 78 81 73 65 61 61 87
NET Medium Index (6-7) 15 30 18 15 14 21 17 23 25 31 31 12
NET High Index (8-10) 4 6 3 3 1 2 2 4 10 8 7 1
Appendix 2 Country comparisons Chart 1 The majority of young employees believe that they will be worse off in retirement compared to their parents Q Do you think that future generations of retirees will be better off or worse off than those currently in retirement
37 | The Young Pragmatic and Penniless Generation
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsI always make sure that 27 34 27 26 17 14 19 22 35 33 32 20 I am saving for retirement
I only save for retirement G
erm
any
Ger
man
y21 27 20 13 17 21 16 6 17 24 20 24 occasionally from time to time
I am not saving for retirement now 6 11 8 11 5 15 9 4 10 8 9 5 although I have in the past Sw
eden
Swed
en
I am not saving for retirement 35 23 34 46 53 40 49 54 36 33 38 46 though I do intend to U
nite
dU
ntie
dK
ingd
omK
ingd
om I have never saved for retirement and 11 6 10 5 8 10 6 13 3 2 1 6 donrsquot intend to
Fran
ceFr
ance
Chart 5 Younger people are more likely not to be using any means of retirement savings Sp
ain
Spai
nQ Which financial means if any are you currently using to prepare for your retirement
Pol
and
Pol
and
only asked in Germany only asked in Spain
Hun
gary
Hun
gary
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
dSt
ates
Stat
es100 100 100 100 100 100 100 100 100 100 100 100
Defined benefit plan 16 10 25 29 15 3 76 11 20 13 5 Ca
nada
Cana
daDefined contribution plan 28 10 17 19 19 14 10 23 40 7 3
Private pension 8 18 14 10 5 9 4 13 12 40 66 4 Ch
ina
Chin
a Government pension social security 12 43 14 21 8 7 4 18 27 33 71 35
Stocks 5 12 14 7 4 17 7 2 13 10 23 9
Bonds 1 8 5 6 2 16 4 2 8 13 14 3 Ja
pan
Japa
n
Mutual funds 2 14 23 4 2 10 3 4 7 16 9 6
Investment insurances (annuities) 2 3 2 3 2 9 4 5 2 4 6 1
Savings accounts 23 37 38 25 23 6 29 15 36 37 65 36
Investment property 2 10 6 7 9 2 5 2 5 11 18 1
Employee stock purchase 1 1 1 4 1 29 0 4 1 7 1
My home 10 5 8 7 7 8 4 6 6 14 30 1
Reverse mortgage 1 4 2 4
My business 2 1 3 2 2 4 1 1 2 4 12 1
Inheritance 3 11 7 11 7 9 9 8 7 9 6 2
Annuities 1 15 2 2 1 4 3 2 1 2 8
Long-term care insurance 2 1 3 2 9 5 1 6 4 7 1
Life insurance 6 11 8 8 14 3 18 15 19 18 36 17
Unterstuumltzungskasse aus 2 Eigenmitteln finanziert
Unterstuumltzungskasse vom 2 Arbeitgeber finanziert
Chart 4 Younger employees are much more likely to aspire to save for retirement Which of the following best explains your approach to saving for retirement This can include money you contribute to any long-term
investment including pensions stocks and shares investment-linked insurances property etc
Q
The Young Pragmatic and Penniless Generation | 38
Plan de empleo mixto 2 (combinacioacuten de las dos anteriores)
Other 1 6 4 0 1 2 2 3 2 2 3 3
None nothing 8 14 12 23 25 31 6 27 21 17 3 24
Donrsquot know 29 6 17 13 19 8 4 9 7 7 0 9
hart 6 The younger generation has more negative associations of retirement Which if any of the following words do you most associate with retirement
Net
herl
ands
Net
herl
ands
Ger
man
yG
erm
any
Swed
enSw
eden
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
d100 100 100 100 100 100 100 100 100 100 100 100
Kin
gdom
Kin
gdom
Freedom 35 32 36 39 19 26 11 20 35 40 37 33
Opportunity 7 27 25 18 4 8 9 10 17 16 9 16 Fr
ance
Fran
ceLeisure 58 48 36 41 23 24 43 32 50 50 55 6
Excitement 2 5 3 8 2 6 1 2 17 17 4 3 Sp
ain
Spai
nPoverty 11 26 23 11 26 14 37 44 7 5 6 20
Insecurity 34 24 18 16 20 18 35 56 10 9 18 44 P
olan
dP
olan
dLoneliness 4 10 17 16 12 7 11 8 5 9 20 12
Ill health 2 19 7 14 15 9 49 23 6 6 29 11 H
unga
ryH
unga
ryDependent on others 11 11 5 18 14 8 18 19 14 6 11 4
Tired 3 4 8 10 14 10 17 6 7 7 13 19 U
nite
dU
nite
dFar away 38 19 25 21 61 32 2 13 33
Stat
es33 14 22
Stat
es
Boredom 14 16 6 12 16 12 15 8 12 12 16 17 Ca
nada
Cana
daEnjoyment 21 16 17 23 14 29 5 3 37 37 35 15
None of the above 0 1 1 2 0 2 1 1 2 2 1 2
Donrsquot know 2 2 3 3 2 2 1 2 0 Ch
ina
6 Ch
ina
hart 7 Many young employees think they are not on course to achieve target retirement income Ja
pan
Japa
n Do you think you will achieve this income [your estimated income needed in retirement]
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
I donrsquot know if I am on course to 56 37 57 59 50 39 49 48 48 41 22 68 achieve my retirement income
No I am on course to achieve around one-quarter (25) of my 10 14 9 13 15 14 14 13 10 10 10 7 retirement income
No I am on course to achieve around 12 20 14 11 19 19 18 15 12 11 23 12 half of my retirement income
No I am on course to achieve around three-quarters (75) of my 8 14 7 4 8 15 9 8 6 11 20 5 retirement income
Yes I am on course to achieve my 15 15 13 14 8 13 11 17 25 27 25 8 retirement income
CQ
CQ
39 | The Young Pragmatic and Penniless Generation
Chart 8 Young people in most countries expect to retire before 65 Q At what age do you expect to retire from all paid employment
Net
herl
ands
Ger
man
y
Swed
en
Uni
ted
Kin
gdom
Fran
ce
Spai
n
Pol
and
Hun
gary
Uni
ted
Stat
es
Cana
da
Chin
a
Japa
n
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
40 or under 0 1 1 0 0 1 3 1 5 12
41-50 1 2 3 5 2 2 6 3 9 4 37 9
51-59 4 4 4 6 2 4 11 5 7 10 30 1
60 5 11 8 12 10 13 19 12 12 16 21 27
61-64 2 11 10 2 20 7 4 13 5 3 1 2
65 17 22 44 31 34 32 16 26 26 32 3 25
66-69 42 32 15 9 12 29 20 13 9 9 0 1
70 19 11 10 18 10 5 10 9 13 12 0 6
71+ 5 5 5 9 4 5 5 3 7 5 1 4
Never 2 1 1 2 2 2 6 4 1 0 0
Donrsquot know 2 3 2 5 3 2 8 9 5 5 1 13
Mean 67 65 65 65 64 65 63 64 63 64 53 59
Median 67 65 65 65 65 65 65 65 65 65 55 60
Chart 9 Younger employees feel they donrsquot have money to invest for retirement Q What is the single biggest obstacle to you saving for retirement right now
Net
herl
ands
Ger
man
y
Swed
en
Uni
ted
Kin
gdom
Fran
ce
Spai
n
Pol
and
Hun
gary
Uni
ted
Stat
es
Cana
da
Chin
a
Japa
n
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
The uncertain economic environment 19 8 13 9 13 19 11 14 12 9 29 27
Lack of money to invest 28 41 33 43 47 34 48 55 47 50 6 19
Fear of poor investment returns over the coming years 2 5 10 7 5 6 8 2 6 8 14 6
Complexity of investment products 4 4 4 3 5 3 5 2 12 5
I donrsquot know how to go about investing for the long-term 2 3 10 8 5 5 3 3 6 8 7 9
The fees charged by financial services companies 2 4 4 2 4 3 4 2 3 5 2 5
I canrsquot afford to take financial advice 3 3 6 8 2 4 3 5 3 2 3 2
I donrsquot trust the financial services industry 12 11 8 6 5 10 6 2 2 3 5 4
I donrsquot see the need to save for the long-term 6 1 2 2 3 3 3 1 2 1 4 3
Concerns about unstable currencies currency fluctuations 2 5 1 3 3 3 4 3 4 5 15 2
Other (PLEASE STATE) 3 3 1 1 3 2 4 6 2 2 1
Donrsquot know 17 12 11 7 8 6 3 6 8 6 3 17
The Young Pragmatic and Penniless Generation | 40
Chart 10 More money would incentivize young employees to save for retirement Q Which if any of the following would encourage you to save for retirement
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsMore generous tax breaks on long-term savings and pensions 20 44 30 32 27 23 42 42 33 43 40 32 products
Ger
man
yG
erm
any
Access to financial education so that I am more aware of what 24 6 14 21 16 22 21 12 23 24 43 25 I need to do for myself
Swed
enSw
eden
Access to professional financial advice so that I have personalized
Uni
ted
20 24 23 23 15 21 25 9 22 23 44 13 U
nite
drecommendations on what steps
Kin
gdom
Kin
gdom
I need to take
Simpler investment products that 12 33 19 28 20 Fr
ance
18 27 16 32 28 36 10 Fr
ance
I can understand with less jargon
Better and more frequent information about my retirement 16 28 20 27 27 23
Spai
n20 18 25 31 45 22
Spai
nsavings
Better legal protection in case I am 12 18 13 18 10 24 18 13 13 19 21 6 P
olan
dP
olan
dsold the wrong product
A pay rise 46 54 44 64 55 50 70 72 67 64 53 37
A better retirement plan pension H
unga
ryH
unga
ry27 32 25 33 29 26 42 35 39 44 33 32 match from my employer
Other 4 2 1 1 2 2 3 3 2 U
nite
d3 0
Uni
ted
Stat
esSt
ates
Donrsquot know 17 9 16 10 10 12 3 8 8 5 3 17
Not applicable - I already have 3 3 4 2 2 1 1 1 2 2 3 sufficient savings Ca
nada
Cana
da
Chin
aCh
ina
Chart 11 A majority of younger employees do not have a written plan for retirement Q Which of the following best describes your retirement planning strategy
Japa
n Ja
pan
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
I have a written plan 7 18 10 9 6 8 6 5 13 10 8 4
I have a plan but it is not written 24 47 37 25 23 31 29 31 37 44 55 24
down
I do not have a plan 61 32 51 61 62 55 62 58 45 42 34 61
Donrsquot know 7 3 3 5 8 6 3 6 4 4 3 12
41 | The Young Pragmatic and Penniless Generation
Chart 12 For young employees friends and family are the leading source of retirement savings information Q And which of these sources (of information) is most important to you
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
Bank adviser 6 11 19 5 25 5 7 4 3 17 10 2 N
ethe
rlan
dsN
ethe
rlan
dsProfessional financial adviser 12 22 10 12 10 19 19 22 21 25 19 10
Insurance agent spokesperson 3 10 2 3 1 3 6 2 3 0 3 2 G
erm
any
Ger
man
yInsurance company website 3 1 3 2 4 4 2 2 1 3 1
Personal finance websites online 8 5 7 8 5 4 10 8 12 6 10 8 retirement planning tools Sw
eden
Swed
enPersonal finance media 2 2 2 2 2 6 3 1 2 1 6 2
Government website 7 1 3 6 U
nite
d5 2 3 3 2 3 7 1
Uni
ted
Kin
gdom
Kin
gdom
Bank website 2 3 3 2 1 0 3 2 1 6 3 3
My employer 12 8 4 9 4 7 5 12 8 5 4 1 Fr
ance
Fran
ceAccountant 2 6 4 4 1 3 1 3 5 5 1 3
Lawyer 2 3 1 2 2 8 4 2 1 2 2 0 Sp
ain
Spai
nFriends and family 21 22 30 28 24 26 18 24 26 20 25 24
None of these P
olan
dP
olan
dNot applicable 21 7 16 18 19 13 17 15 14 9 5 41
Hun
gary
Hun
gary
Chart 13 Most young workers feel their employer should provide some kind of pension Q In the future what if anything should employers do to help people plan for retirement
Uni
ted
Uni
ted
Stat
esSt
ates
Cana
daCa
nada
Chin
aCh
ina
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 Ja
pan
Japa
n Employers should be required to 24 43 20 40 21 26 20 28 37 34 20 30 contribute to workersrsquo pensions
Employers should be required to make a pension available but not to 12 13 7 17 20 15 15 4 11 14 22 5 contribute into it
Employers should not be required to provide pensions but should 15 9 12 8 9 8 11 6 11 9 9 11 provide information on how to plan for retirement
Employers should provide a range of flexible benefits and 13 18 18 16 15 27 25 28 21 22 45 12 allow individuals to choose which benefits they actually want
Nothing ndash it should be left to individual employees to take care 2 2 5 1 4 3 3 5 6 5 1 9 of themselves
Nothing ndash it should be left to the government to take care of its 2 5 5 2 5 8 15 14 1 4 0 4 citizens
Donrsquot know 30 10 32 17 27 12 12 15 13 13 3 29
The Young Pragmatic and Penniless Generation | 42
Chart 14 Workplace pensions are relatively low down in young workersrsquo priorities when choosing a job Q How important to you would the following workplace benefits be if you were choosing your next job
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsBasic salary 86 93 88 91 88 92 90 94 90 93 96 94
Holiday entitlement 87 94 89 91 92 94 91 94 93 94 96 91 G
erm
any
Ger
man
yOvertime and bonus pay 86 93 87 88 89 90 89 94 90 91 97 90
Location of workplace 88 91 86 92 89 90 89 92 93 93 92 86 Sw
eden
Swed
enMedical health insurance 73 92 84 65 86 87 88 87 93 94 98 83
Opportunities for career progression 86 91 81 90 90 94 91 94 92 91 96 81 U
nite
dU
nite
dAccess to a workplace retirement 85 85 81 82
Kin
gdom
78 84 80 78 84 86 93 74 K
ingd
omplan with employer contributions
Access to good training provision 85 87 85 88 86 91 85 93 86 90 95 74 Fr
ance
Fran
ceFlexible working hours 79 87 58 86 81 89 81 87 91 91 92 57
Life insurance 72 75 79 69 80 82 Sp
ain
84 80 81 88 93 74 Sp
ain
(death in service benefits)
Phased retirement or other employer programs providing for 74 54 75 71 72 81 76 74 76 81 91 65
Pol
and
Pol
and
a transition into retirement
Ability to work past the normal 68 57 64 65 64 74 72 65 74 76 80 70 retirement age H
unga
ryH
unga
ry
Access to a workplace retirement 62 74 61 68 59 77 61 47 68 74 89 65 plan without employer contributions U
nite
dU
nite
dSt
ates
Stat
esEmployee share plans 50 72 54 65 59 73 61 51 64 73 91 55
Access to creche help with the 67 75 64 56 69 79 75 83 58 69 89 68 cost of childcare Ca
nada
Cana
da
Opportunities for foreign travel 53 54 60 55 50 71 58 66 57 61 79 37
Company car 51 46 45 47 49 63 51 49 36 49 69 Ch
ina
39 Ch
ina
Japa
n Ja
pan
Chart 15 Young workers think the state pension will need to be reformed Q With the cost of government pensions becoming a greater concern as people live longer which if any of the following do you think
the government should undertake
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
The government should reduce the overall cost of state pension 15 33 16 15 16 20 28 22 21 26 30 16 provision by reducing the value of individual pension plans
The government should increase overall funding available for the 12 21 30 22 14 34 19 26 21 18 29 10 state pension through raising taxes
43 | The Young Pragmatic and Penniless Generation
he government should take a alanced approach with some 27 26 12 30 28 23 24 16 34 31 38 41 eductions in individual payments nd some increases in tax
he government should not do nything State pension provision 7 2 12 5 3 4 3 3 5 4 0 5 ill remain perfectly affordable in he future
onrsquot know 38 19 29 29 39 20 26 34 19 21 4 28
Net
herl
ands
art 16 Products which protect against investment risk are the most important to young workers ( interested) Thinking about the types of financial products you could purchase to help provide you with security in retirement on a scale of 1 to 5
how interested are you in the following options G
erm
any
Swed
en
Uni
ted
Kin
gdom
ase 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 Fr
ance
100 100 100 100 100 100 100 100 100 100 100 100
product providing a guaranteed etirement income stream or 75 81 73 76 74 83 78 76 87 85 94 69
Spai
nifetime income in retirement
product which protects my 74 79 73 76 72 82 77 74 84 86 94 65 etirement income against inflation P
olan
d
product which guarantees that I 72 82 73 78 75 81 76 73 86 86 90 67 onrsquot lose my initial investment H
unga
ry product which helps meet the ost of long-term care if I become 74 79 74 77 70 79 76 71 86 85 84 66
Uni
ted
nable to look after myself St
ates
product which protects my capital 71 81 71 76 68 76 77 73 84 83 93 65 rom poor investment returns Ca
nada
product which generates a etirement income and allows 69 78 71 75 68 81 77 72 84 86 94 70 e to take a lump sum from the
Chin
anvestment should I need to
product where the annual 66 78 68 75 72 79 77 70 85 86 87 64 anagement charges are kept low Ja
pan
product which enables me to eep some control over how my 71 73 70 75 72 80 75 69 88 85 91 63 avings are invested during my etirement
product which manages the sset allocation so that I am never 68 70 67 73 66 76 71 67 80 83 95 60 xposed to a level of risk Irsquom not omfortable with
product which continues to rovide a retirement income to my 74 78 71 75 73 81 79 73 86 82 94 60 pouse in the event that I die first
product which protects my family gainst having to pay estate taxes 73 76 71 74 75 81 75 69 82 82 89 56 hen I die
product which locks in investment 72 71 63 73 64 71 59 56 81 84 89 61 eturns during the good years
Tbra
Tawt
D
ChQ
B
Arl
Ar
Ad
Acu
Af
Armi
Am
Aksr
Aaec
Aps
Aaw
Ar
The Young Pragmatic and Penniless Generation | 44
Introduction Todayrsquos twentysomethings are young but hardly carefree At a time in life when previous generations built a career and laid the foundations for a secure future many of todayrsquos young workers face unprecedented financial challenges Student debt uncertain employment prospects high housing costs the potential support of elderly parents and receding government retirement benefits are just a few of the economic and financial uncertainties that undermine their ability to plan and save for their retirement At a time in life when savings have the longest time horizon for growth these challenges work against young workersrsquo future retirement readiness
5 | The Young Pragmatic and Penniless Generation
The structure and methodology of this report specialized public policy interventions Thus the research reflects
The Young Pragmatic and Penniless Generation polled employees views of the mainstream working population
and retirees in 12 countries Canada China France Germany
Hungary Japan the Netherlands Poland Spain Sweden the A guide to this report United Kingdom and the United States These countries were The reportrsquos conclusions and recommendations flow from an
selected on the basis of having distinctive retirement systems examination of todayrsquos young employees in the context of older
as well as varying demographic and aging trends i and retired employees
bull Par t 1 of this report explores the financial pressures that Respondents were interviewed using an online panel survey young people face from unemployment intermittent
in their native language ii in January and February of 2013 employment and extended full-time education
The sample comprised 10800 employees including 2722 people bull Par t 2 reviews the savings outlook including young employeesrsquo between the ages of 20 and 29 and 1200 retirees The 12 attitudes toward saving expectations for retirement income
countries surveyed represent employees who cumulatively have and retirement age and perceived responsibilities toward
access to around 85 of the worldrsquos private retirement assets iii parent care
(excluding government retirement benefits) bull Par t 3 examines some of the potential savings obstacles such as household economics and the income position of
Issues covered included attitudes toward retirement the individual employee and the importance of advice and
preparedness the role of government and employers in the education in altering youth perceptions of financial priorities
provision of retirement benefits and the impact of the financial bull Par t 4 explores how to encourage young people to save and crisis on attitudes to investment risk and retirement planning the role of employers in this
The survey did not include the self-employed unemployed
or long-term incapacitated since each of these groups faces The final part sets out recommendations for improving the
specific retirement planning challenges which may require retirement readiness of this important group within society
The Young Pragmatic and Penniless Generation | 6
Part 1 Young people at risk in an uncertain world As societies enjoy the benefits of longer life expectancy people will need to work harder to secure a comfortable retirement This will mean saving more during working life and a redefinition of how to approach retirement When it comes to achieving this important life goal however some groups are more at risk This report examines one such group in detail young employees at the beginning of their working life
7 | The Young Pragmatic and Penniless Generation
Countr y Median Income
lsquo(nearest 000) Married Undergrad degree or more Dependent children (any)
All 20-29 year olds $27500 25 53 25
Netherlands $37000 17 39 20
Germany $38000 33 18 27
Sweden $39000 16 30 32
United Kingdom $48000 24 53 24
France $28000 23 66 26
Spain $23000 13 54 25
Poland $13000 38 57 28
Hungary $6000 31 34 16
United States $43000 26 58 27
Canada $51000 36 55 27
China $18000 31 89 30
Japan $37000 12 63 11
Who are younger employees are also more likely than average to be single and much less
This report defines younger employees as people between likely to have children A quarter are married compared to an
20 and 29 years of age a group that belongs to the Millennials average of 64 for the generation now in their 50s
generation born between 1980 and 2000 This group differs
widely among countries although there are clear trends Education levels vary across the countries included in this research
Many have been in the labor market just a few years after a long due to differences in higher education systems (Chart 1) Overall
period of higher education Unsurprisingly median household those aged 20-29 were more likely than the average respondent
incomes are lower around $27500 according to this research to have at least an undergraduate degree The increasing
compared to an overall median of $46000 Twentysomethings prevalence of education has both positive and negative impacts
Chart 1 A portrait of younger employees Q Which of the following reflects your annual household income before taxes
Q What is your marital status
Q Please choose from the following list the highest level of educational or professional qualification you have
Q How many children do you have who are financially dependent on you Please include all children and stepchildren
Why are young people at risk Such changes will not be achieved easily in the current climate
Todayrsquos young people face a challenging set of circumstances The global financial crisis of 2007-8 not only created a need
An aging society means fewer employees supporting more for long-term structural retirement reforms it also led to the
retirees which is profoundly affecting how societies fund more immediate menace of historically high levels of youth
retirement In most of the countries surveyed lsquotraditionalrsquo unemployment The International Labour Organization (ILO)
retirement provision such as government retirement benefits estimated that in 2013 unemployment affected 73 million young
and other forms of social security or employer-sponsored people aged 15-24 worldwide representing more than 126
retirement arrangements like defined benefit company of all young people iv Across the EU 228 of people under 25
retirement plans are already subject to long-term reforms were unemployed in 2012 and in Spain the figure was 53 v
These reforms will reduce the value of future entitlements It is worth noting that the study is conducted among those who
by lowering retirement income benefits and raising the age are currently employed (part- or full-time) so the findings do not
of retirement and are likely to begin to take full effect from fully take into account the significant number of unemployed
the middle of this century just as the current generation young people
of twentysomethings enters retirement Consequently the
retirement prosperity enjoyed by todayrsquos Baby Boomers will not
be shared by subsequent retiring generations unless there is a
major change in their savings behavior
The Young Pragmatic and Penniless Generation | 8
13
4
16
3
Chart 2 Youth unemployment in 2005 and 2012 across Aegon survey countries (excluding China)
60 1
24
14
3
2005 2
06
2012
23
8
45
15
2
81
19
4
30 2
81
86
79
15 9
4
95
37
8
0 2
65
y
Japan
Spain
19
7
Canad
a
Fran
ce
Poland
Germ
any
Hunga
r
Sweden
OECD tota
l
Nether
lands
53
2
United S
tate
s
United K
ingdom
22
Note Youth unemployment rate of youth labour force (age 15 - 24) vi
23
7
12
2
21
11
3
16
2
The problems of high levels of youth unemployment and economic uncertainty affect those with jobs as well as those without
as they breed lower levels of job security and downward pressure on wages They also have a significant impact on the psychology and
confidence of younger people including those in work and their confidence in their short-term and retirement finances As the survey
findings reveal most young employees expect to find themselves worse off than their parentsrsquo generation when they enter retirement
(Chart 3)
Chart 3 The majority of young employees believe that they will be worse off in retirement compared to their parents Q Do you think that future generations of retirees will be better off or worse off than those currently in retirement
Base 20-29 year olds
Donrsquot knowBetter off
8 13
Total Respondents
2722
20 About
the same
59
Worse off
9 | The Young Pragmatic and Penniless Generation
Another major influence on the ability of young employees to save for retirement is the growth of higher education One positive
is that college graduates are more likely to benefit from lower unemployment rates fare better during economic downturns and
experience higher incomes across their lifetime supporting aspirations like home ownership vii and helping to sustain long-term
savings and increased levels of retirement preparedness (Chart 4)
Chart 4 Graduates are likely to enjoy a greater sense of retirement preparedness Q Thinking about how much you are putting aside to fund your retirement are you saving enough
Base All lsquovery prepared for retirementrsquo
30 27
17 16Postgraduate degree or qualification
College degree University degree Some college or trade school
8 High school graduate
1 Below high school graduate Other
Conversely full-time education delays entry into the labor Why is this group of young employees important arket causing a loss of several years of full-time earnings By the middle of the century todayrsquos 20-29 year olds will
otential Moreover ballooning levels of student debt may have led the world economy through an economic recovery
ignificantly delay the onset of post-graduation saving and dramatic demographic shifts during a period of greater
etween 2004 and 2012 for example student debt in the uncertainty for modern retirement systems and other issues
nited States tripled to $966 billion nationwide The effect In developing countries such as China this group will be more
f this is that todayrsquos younger employees must take greater affluent than their parents but still need to deal with the
ersonal responsibility for their savings a challenge in the consequences of a rapidly aging population and an economy
urrent economic and financial circumstances which has passed its phase of rapid growth
For all of their challenges however this group of young people
represents the biggest opportunity to change societal savings
behaviors for the better The Aegon Retirement Readiness Survey
2013 provides insights into how best to achieve this through a
greater understanding of the grouprsquos outlooks and savings habits
m
p
s
B
U
o
p
c
The Young Pragmatic and Penniless Generation | 10
45
29
20
6
50
24
21
6
56
19
21
4
46
27
21
6
Better off About the same
Worse off Donrsquot know
All work
ers
20-29 ye
ar old
s
Male 2
0-29 ye
ar old
s
Fem
ale 2
0-29 ye
ar old
s
Chinarsquos young employees bucking the gloomy trend optimistic that their economy will continue to expand over
A key finding of this yearrsquos Aegon Retirement Readiness the next 30 years Concerns about the sustainability of
Survey is that Chinese employees are far more confident growth remain however Just 37 of Chinese 20-29 year
and optimistic about their financial future than employees olds believe that the Chinese economy will improve over
in other countries This is also true of younger employees the next 12 months ndash indeed 2013 will see the economyrsquos
Of those Chinese aged 20-29 half (50) believe that they slowest expansion since 1990 x Long term Chinarsquos rapidly
will be better off in retirement than those currently in aging population makes creating a comprehensive and
retirement Younger Chinese men are the most optimistic sound retirement system an urgent priority xi Coverage has
with 56 believing that they will be better off expanded in the past 10 years with reforms such as the
introduction of the Enterprise Annuity in 2005 yet it is still
This optimism is relatively justified Since 1980 Chinese GDP not clear how China will build a universal retirement system
per capita has increased thirty-fold from $193 to $6091 across both the government-sponsored and private sectors
in 2012 viii While this dramatic increase has not benefitted However the success of reforms carried out to date suggests
all Chinese equally ndash by the Chinese governmentrsquos measure that tax incentives and efforts to improve awareness are
99 million rural Chinese live in poverty ix ndash huge progress required as part of any long term solution
has been made and young people in China are generally
Chart 5 Chinarsquos younger employees are confident of a better retirement Q Do you think that future generations of retirees will be better off or worse off than those currently in retirement
Base Respondents in China
11 | The Young Pragmatic and Penniless Generation
Part 2 The savings outlook of young employees This chapter explores the financial behaviors and savings gaps and needs of 20-29 year olds through their attitudes toward financial issues the wider economy and the savings required for a comfortable retirement
The Young Pragmatic and Penniless Generation | 12
75
21
4
69
27
4
64
31
4 5
7
36
7
20-29
30-39
40-49
50-59
44
40
16
NET Low Index (0-5)
NET Medium Index (6-7)
NET High Index (8-10)
60-69
Retirement readiness and young employees However many young employees have concerns about achieving
Retirement is seen as a major life stage by young employees this Over a third (38) are pessimistic that they will not have
They typically expect to spend an average 20 years of their lives enough to live on in retirement and 44 are pessimistic about
in retirement a definition of retirement that is consistent across being able to choose when they retire Furthermore 28 have
all working age groups Retirement conjures broadly positive made no plans at all for their retirement which may help explain
associations Fully 63 of employees in their twenties aspire some of these concerns Health worries are less of an issue with
to travel during retirement 39 see it as a period of leisure 52 being optimistic that they will enjoy good health in old age
and 30 associate it with freedom The need to plan and save although 20 believe that they will not which is perhaps related
for this phase of life is also widely accepted Half (50) of to the 17 who associate retirement with ill health in general
employees in their twenties are aware of the need to save and
64 feel a high or very high degree of personal responsibility Overall 75 of employees in their twenties achieved a low
to ensure sufficient income for retirement retirement readiness score of 0-5 on the Aegon Retirement
Readiness Index (please refer to the glossary and Appendix 1 for
an explanation of the Index) The percentage of employees with a
low score of 0-5 drops with each increase in age group and is 44
among those in the lsquoat retirementrsquo group of 60 to 69 year olds
Chart 6 Aegon Retirement Readiness Index scores for employees across age groups For more information on the ARRI see page 36
Base All aged 20 - 69
Life stage and savings attitudes Getting married and starting a family are two such events
he Retirement Readiness Index reveals that retirement Of employees in their twenties 25 are married and
reparedness is to some extent age- and life stage-related 25 have children whereas for those in their 30s 54 are
hart 6) For younger employees the idea that retirement is married and 56 have children representing a major shift
r awayrsquo combined with lower earnings and other spending toward parenthood
riorities (such as higher education or purchasing a house)
an be powerful obstacles to saving for retirement Thus while Encouragingly while young employees are less likely to
5 of all employees say that they lsquoalways make surersquo that they have started saving for retirement many see themselves as
re saving for retirement just 25 of 20-29 year olds do so future lsquoaspiringrsquo savers Fully 41 intend to save in the future
t present over half (57) of 20-29 year olds are not saving compared to 27 of all employees and only 7 do not intend
r retirement compared to 46 of all employed adults to save for retirement This large group of aspiring savers
ven in China where 44 are always saving for retirement who are committed to the idea of putting money aside for
st 32 of 20-29 year olds do so retirement challenges the view that young people are unwilling
to save Furthermore since converting these young employees
his life cycle effect can be seen in numerous ways At the from aspiring savers to regular savers may depend on the
utset of adult life employees experience lower income and right economic conditions and appropriate financial incentives
igher spending as they prioritize and fund life events with a helping them is a major opportunity for governments and
ignificant impact on their ability or desire to save for retirement employers
T
p
(C
lsquofa
p
c
3
a
A
fo
E
ju
T
o
h
s
13 | The Young Pragmatic and Penniless Generation
35 25 20 19 12 9 27 41 7 7
I always make sure I only save for I am not saving for I am not saving for I have never saved that I am saving retirement occasionally retirement now although retirement though for retirement and for retirement from time to time I have in the past I do intend to donrsquot intend to
All 20 to 29 year olds
NET Low Index (0-5)
NET Medium Index (6-7)
NET High Index (8-10)
Chart 7 Younger employees are much more likely to aspire to save for retirement but the majority are not saving Q Which of the following best explains your approach to saving for retirement This can include money you contribute to any
long-term investment including pensions stocks and shares investment-linked insurances property etc
Other findings support the assertion that younger savers This can be seen in Chart 8 More 20-29 year olds claim that
are open to increasing their retirement savings Over a third they are not likely to be saving for retirement by any means
(37) of 20-29 year olds feel lsquovery responsiblersquo for ensuring (17 against 12 for all adults) and are generally less likely
a sufficient retirement income Note however that this does to use any of the savings products mentioned Revealingly
not translate into better developed financial plans and savings 20-29 year olds are far less likely to name lsquogovernment benefits
strategies Only 7 in this age group feel they have lsquowell in retirementrsquo as a source of retirement income although almost
developedrsquo personal retirement plans and 33 say they are all respondents have some such entitlement This may be due
lsquohardly saving anythingrsquo for retirement Clearly awareness of the to unawareness of government benefits and or greater
retirement situation does not translate into actual retirement scepticism about governmentsrsquo ability or willingness to
planning activity provide for them in old age
The Young Pragmatic and Penniless Generation | 14
Chart 8 Younger people are more likely not to be using any means of retirement savings Q Which financial means if any are you currently using to prepare for your retirement
33 Savings accounts 31
36 Government pension social security 24
25 Defined benefit plan 21
22 Private pension 17
23 Defined contribution plan 15
20 Life insurance 15
14 Stocks 10
14 My home 9
12 Mutual funds 8
9 Inheritance 7
9 Bonds 7
8 Investment property 7
5 Employee stock purchase 5
5 Investment insurances (annuities) 4
4 Long-term care insurance 4
6 Annuities 3
My business 2 3
Reverse mortgage 1 1
Other 3 2
12 None nothing 17
6 Donrsquot know 10
All 20 to 29 year olds
Leisure
Freedom
Far away
Insecurity
Enjoyment
Poverty
Ill health
Boredom
Opportunity
Dependent on others
Loneliness
Tired
Excitement
None of the above
Donrsquot know
Retirement associations What does the younger generation feel about retirement and want to get out of it Perhaps unsurprisingly 20-29 year olds are more
likely to be negative than older respondents associating retirement with boredom loneliness and ill health They are also far more
likely to believe retirement is lsquofar awayrsquo which is likely to be a barrier to retirement saving
15 | The Young Pragmatic and Penniless Generation
Chart 9 The younger generation has more negative associations with retirement Q Which if any of the following words do you most associate with retirement
44 Leisure 39
36 Freedom 30
17 Far away 26
25 Insecurity 25
25 Enjoyment 21
19 Poverty 19
15 Ill health 17
9 Boredom
13
16 Opportunity
13
10 Dependent on others
12
9 Loneliness
11
0
r olds
7Tired
1
6Excitement
6
2None of the above
1
2Donrsquot know 2
All 20 to 29 yea
Aspirations and responsibilities for retirement Income levels in retirement ung people have similar retirement aspirations to the general A high proportion (47) do not know if they are on course
pulation for example travel (63) spending time with to achieve their retirement income goal Combined with the
iends and family (61) and pursuing new hobbies (52) high level of financial responsibility young employees expect
r them however retirement also includes the responsibility of to assume in retirement it is clear that people not only need
ring for others Two-fifths (40) believe that lsquoadult children to build much greater awareness of what kind of financial
retirees should help through providing financial support to pressures they are likely to face in retirement but also require
eir parents if neededrsquo and 28 believe that this will affect greater support in establishing realistic retirement income
em directly in retirement through providing financial support targets which are capable of meeting their needs
their parents A fifth (21) also expect to spend some of
eir retirement caring for other family members while just
donrsquot expect to provide for anyone compared to 40 of all
ployees Clearly todayrsquos young employees anticipate serious
ancial responsibilities in their retirement
Yo
po
fr
Fo
ca
of
th
th
to
th
30
em
fin
The Young Pragmatic and Penniless Generation | 16
Chart 10 Many young employees do not think that they are on course to achieve target retirement income Q Do you think you will achieve this income [your estimated income needed in retirement]
Base 20-29 year olds
Yes I am on course to achieve my retirement
income
16
47
12
16
10
I donrsquot know if I am on course to achieve my
retirement income
No I am on course to achieve around
one-quarter (25) of
No I am on course to achieve around half of my
retirement income
No I am on course to achieve around
three-quarters (75) of my retirement income
532
China
586
Japan
United S
tate
s
628
Poland
635
Canad
a
636
Hunga
r
638
y
Fran
ce
645 647
Spain
Sweden
649
United K
ingdom
651
Germ
any
653
Nether
lands
666
my retirement income
When will young people retire Media reports about the need to raise the age of retirement appear to have influenced younger employees Fully 44 of 20-29 year
olds do not expect to be able to choose their retirement date although the younger generation do expect to retire at a similar age
to older employees 63 This varies considerable by country In the Netherlands young employees expect to retire eight years later
than those in Japan Some countries such as China and Japan have surprisingly low expected retirement ages suggesting that young
employees may benefit from having a better understanding of when government or workplace retirement benefits kick in
Chart 11 Young people in most countries expect to retire before 65 Q At what age do you expect to retire from all paid employment
Base 20-29 year olds
Despite expecting to retire at the same age as their parents younger employees are more open to a transition into retirement
reflecting their more flexible outlook toward work Around half (51) are happy to change the way they work in some way as they move
into retirement Just 8 expect to keep working as they do currently
17 | The Young Pragmatic and Penniless Generation
Part 3 What is holding young employees back Insights into what young employees feel is holding them back from saving or saving more can be used to encourage younger people to adopt more positive savings behaviors This chapter explores the attitudes of young employees toward the financial obstacles they face and asks what actions they have taken in preparation for retirement The findings reveal that while the majority lacks adequate planning for their retirement needs financial shortcomings are only part of the stor y Spending preferences play a key role in the savings gap of advanced economies
The Young Pragmatic and Penniless Generation | 18
Lack of money to invest 37
16 The uncertain economic environment
7 Fear of poor investment returns over the coming years
6 I donrsquot trust the financial services industry
6 I donrsquot know how to go about investing for the long-term
4 oncerns about unstable currencies currency fluctuations
4 Complexity of investment products
4 I canrsquot afford to take financial advice
3 The fees charged by financial services companies
3 I donrsquot see the need to save for the long-term
Other 2
Donrsquot know 8
A pay rise
More generous tax breaks on long-term savings and pensions products
A better retirement plan pension match from my employer
Better and more frequent information about my retirement savings
Simpler investment products that I can understand with less jargon
Access to professional financial advice so that I have personalized recommendations on what steps I need to take
Access to financial education so that I am more aware of what I need to do for myself
Better legal protection in case I am sold the wrong product
Other
Not applicable - I already have sufficient savings
Donrsquot know
Obstacles and incentives to saving
Chart 12 Younger employees feel they donrsquot have money to invest for retirement Q What is the single biggest obstacle to you saving for retirement right now
Base 20-29 year olds
C
What is the single biggest obstacle preventing twentysomethings that they rank pressing and desirable life goals such as marriage
m saving for retirement Not having enough money to invest starting a family vacations and other leisure activities above the
top of the list cited by over a third (37) although this figure need to plan for retirement This suggests the savings gap is
ops to just 6 in the emerging market of China where mean preference-driven
omes are the lowest by far ($18000) suggesting that lack of
sh may be partly a state of mind Young employees in China The biggest obstacle to retirement savings cited by one-eighth
actually more worried about local concerns such as economic (13) of respondents is either not knowing how to invest for the
certainty (29) and currency instability (15) Behavioral long-term or the complexity of investment products charges and
ance has an impact too with the way young employees frame fees Ready solutions to this include improving young employeesrsquo
eir financial priorities creating its own obstacles to saving financial literacy about retirement planning and creating easier
many as 57 of 20-29 year olds believe that saving for access to professional financial advice
tirement is important but not a current priority suggesting
fro
is
dr
inc
ca
are
un
fin
th
As
re
19 | The Young Pragmatic and Penniless Generation
Chart 13 More money would incentivize young employees to save for retirement Q Which if any of the following would encourage you to save for retirement
Base 20-29 year olds
57 A pay rise
More generous tax breaks on long-term savings and pensions products
34
A better retirement plan pension match from my employer
33
Better and more frequent information about my retirement savings 26
Simpler investment products that I can understand with less jargon 24
Access to professional financial advice so that I have personalized recommendations on what steps I need to take 23
Access to financial education so that I am more aware of what I need to do for myself 22
Better legal protection in case I am sold the wrong product 16
Other 2
Not applicable - I already have sufficient savings 2
Donrsquot know 10
Chart 14 Very few younger employees have a written plan for retirement Q Which of the following best describes your retirement planning strategy
Base 20-29 year olds
5 Donrsquot know I have a
written plan
8
34 I have a plan but it is not
52 written down
I do not have a plan
Turning to incentives greater remuneration predictably tops a list Retirement planning of what would encourage 20-29 year olds to save for retirement Retirement planning is essential to adequate retirement saving
More tellingly a third (33) would like their employer to provide although it is somewhat lacking in todayrsquos younger employees
a better retirement plan into which both parties contribute Over half (52) have no retirement planning strategy at all
Better information and simple products would also help more and only 8 have noted down their retirement strategy
people to save A quarter (26) would be encouraged to save by
better and more frequent information about retirement savings Nevertheless the respondents polled believe that the current
while a similar number (24) want simple investment products global economy makes retirement planning increasingly
that are easy to understand As with the previous question a important ndash 71 agreed with this statement It is clear from this
lack of investment knowledge and the complexity of investment that young people between the ages of 20 and 29 do not lack
products are revealed as obstacles to savings the will to save they lack the opportunity
The Young Pragmatic and Penniless Generation | 20
Part 4 Creating the right conditions for young employees to save How may young employeesrsquo obstacles to saving be overcome For retirement readiness this will be a defining question of the early twenty-first centur y ndash and an extremely challenging one given the number of serious issues affecting younger employeesrsquo finances What was learned in the previous chapter about encouraging young employees to save is a start This chapter examines which areas and triggers to saving can be unlocked and whether government employer or individual should take most responsibility
21 | The Young Pragmatic and Penniless Generation
Friends and family
Professional financial adviser
17
24
Bank adviser 9
Personal finance websites online retirement planning tools
My employer
Government website
4
8
7
Insurance agent spokesperson
Accountant
3
3
Personal finance media 3
Lawyer
Bank website
3
2
Insurance company website
Donrsquot know
2
15
Information and advice on retirement saving strong theme revealed by our findings is that younger This finding is remarkably consistent across the countries
mployees want more information on savings products and sur veyed despite significant differences in market makeup
etter access to advice The largest share 24 (compared although some differences exist For instance a quar ter
o 17 for all employees) finds friends and family to be the (25) of young employees in France turn to bank advisers
ost important source of advice followed by professional for financial information nearly triple the number among all
dvisers (17) and bank advisers (9) That young employees young people (9)
urn to friends and family first suggests an unmet need for
rofessional financial advice This is both a challenge and an
pportunity for the financial ser vices sector
hart 15 For young employees friends and family are the leading source of retirement savings information Which of these sources (of information) is most important to you
ase 20-29 year olds
A
e
b
t
m
a
t
p
o
CQ
B
What is the role of the workplace in retirement planning Does this influence what retirement benefits younger
In response to shifting employment patterns todayrsquos younger employees expect from their workplace Certainly a majority
employees are less loyal to their employers than older workers favor workplace retirement plans with 61 believing that these
Fully 39 of 20-29 year olds are planning to look for a new job should be a fundamental part of pay (although this is lower
in the next 12 months compared to 29 of all workers and than for employees overall) and just 4 feel that retirement
31 frequently think about quitting their jobs Strikingly while planning should be left entirely to individuals
53 of all workers plan to stay with their current employer
until retirement just 37 of 20-29 year olds say this However there is evidence of a slight shift in perceptions
Younger workers are less likely to want workplace retirement
Doubtless much of this is because younger workers are more plans over other factors Of those who want employer
mobile and have more opportunities Another trigger to lower retirement plan contributions only 46 wanted this even if
employer loyalty may be the expectation of holding more jobs it reduced benefits and 35 (compared to 43 of all workers)
and even pursuing multiple careers over a working lifetime if it cut jobs
The Young Pragmatic and Penniless Generation | 22
Donrsquot know Employers should be
required to contribute to workersrsquo pensions
5 Nothing ndash it should be left to the government to take 18
care of its citizens 28
4 Nothing ndash it should be left to individual employees to
take care of themselves
13
22
Employers should provide a range of flexible benefits
and allow individuals to choose which benefits they
actually want
10 Employers should
be required to make a pension available but not
to contribute into it
Employers should not be required to provide pensions but should
provide information on how to plan for retirement
Chart 16 Most young workers feel that their employer should provide some kind of pension Q In the future what if anything should employers do to help people plan for retirement
Base 20-29 year olds
Are other workplace benefits more important Younger workers were asked to rate the importance of various workplace benefits The results reveal how highly they value the
elements of their compensation package Chart 17 shows that 87 of young employees believe a workplace retirement plan with
employer contributions would be an important factor when choosing their next job While retirement may be decades away for
twentysomethings 80 believe programs provide for a phased retirement are important
23 | The Young Pragmatic and Penniless Generation
Basic salary 94
93 Holiday entitlement
91 Overtime and bonus pay
91 Location of workplace
88 Medical health insurance
87 Opportunities for career progression
Access to a workplace retirement plan with employer contributions 87
Access to good training provision 86
Flexible working hours 85
Life insurance (death in service benefits) 81
Phased retirement or other employer programs providing for a transition into retirement 80
Ability to work past the normal retirement age 70
Access to a workplace retirement plan without employer contributions
67
Employee stock plans 65
Access to creche help with the cost of childcare 59
Opportunities for foreign travel 50
Company car 43
Chart 17 Workplace retirement plans are a relatively low priority for younger workers when choosing a job How important to you would the following workplace benefits be if you were choosing your next job
ase 20-29 year olds
Q
B
Regarding workplace benefits provided by employers today considered just enough to fulfill basic needs and in China a
young employees are about as likely as all workers to be offered fully formed nationwide retirement system is still some way off
retirement tools such as annual plan statements and online The future shape and affordability of these plans is debated in
tools from their employer though it is concerning that 24 do all of the sur vey countries to var ying degrees
not know if such tools are available or not Those provided are
considered helpful Younger workersrsquo views on reform are important because
changes to government retirement benefits are more likely
The role of government to affect them than any other part of the working population
The generosity of government retirement benefits varies The main concern cited by 57 is of facing less generous
considerably in the countries sur veyed In some countries such government retirement benefits than those enjoyed by their
as France government benefits are the primar y mechanism parentsrsquo generation
for funding retirement while in the United Kingdom they are
The Young Pragmatic and Penniless Generation | 24
The government should reduce the overall cost of state pension provision by
reducing the value of Donrsquot know individual pension plans
25 22
4 The government should not do anything State pension provision will
remain perfectly affordable in the future
28
21 The government should increase overall funding
available for the state pension through
raising taxes
The government should take a balanced approach with some reductions in individual payments and
some increases in tax
Chart 18 Young workers think that the government retirement system will need to be reformed Q With the cost of government retirement benefits becoming a greater concern as people live longer which
if any of the following do you think the government should undertake
Base 20-29 year olds
The younger generation believes that the government cannot What do young employees look for in a retirement product continue to provide as it does now ndash just 4 think government The sur vey findings show that young employees have
benefits will remain affordable to society However there is no reser vations about employer and government retirement
consensus on what governments should do to reform retirement benefits So what then do they want from a private savings
plan systems Over a fifth (22) think retirement entitlements product The savings product feature most valued by younger
should be cut just over a fifth (21) think governments should workers is protection against investment risk (Char t 19)
raise taxes and more than a quarter (28) think a mixture of This may be in the form of no loss of initial investment a
the two is the best solution Another quarter admits that they guaranteed income stream or protection against inflation
donrsquot know what should be done This is reasonable ndash the initial investment of those farthest
from retirement is most at risk However less consideration
is given to savings grow th through investment returns This
suggests that there is an oppor tunity to educate young
workers about the trade-off between returns and risk
management and what they stand to gain
25 | The Young Pragmatic and Penniless Generation
Chart 19 Products which protect against investment risk are the most important to young workers ( interested) Q Thinking about the types of financial products you could purchase to help provide you with security in retirement on a scale of 1 to 5
how interested are you in the following options
Base 20-29 year olds
A product providing a guaranteed retirement income stream or lifetime income in retirement 82
A product which protects my retirement income against inflation 81
A product which guarantees that I donrsquot lose my initial investment 81
A product which helps meet the cost of long-term care if I become unable to look after myself 80
A product which protects my capital from poor investment returns 79
A product which generates a retirement income and allows me to take a lump sum from the investment should I need to 79
A product where the annual management charges are kept low 78
A product which enables me to keep some control over how my savings are invested during my retirement 77
A product which manages the asset allocation so that I am never exposed to a level of risk Irsquom not comfortable with 76
A product which continues to provide a retirement income to my spouse in the event that I die first 75
A product which protects my family against having to pay estate taxes when I die 72
A product which locks in investment returns during the good years 70
The lsquodefined ambitionrsquo retirement system in This removes some of the disadvantages of leaving
the Netherlands a sustainable retirement solution retirement liabilities exclusively up to employers
for young workers (defined benefit) or employees (defined contribution)
In the Netherlands as elsewhere young workers are faced In the Netherlands this is likely to involve legislation which
with an increasing retirement age decreasing government lets retirement funds automatically adjust pay-outs and
suppor t for retirement and declining traditional defined retirement age as life expectancy changes xii
benefit employer retirement plans Reforms proposed
by the Dutch may show a way for ward for all mature and This model has garnered interest elsewhere In the
aging economies United Kingdom Pensions Minister Steve Webb expressed
interest on a more limited scale with a government
rsquoDefined ambitionrsquo proposes that risks are not taken on fully guarantee for a minimum rate of return for defined
by either employer or employee but are shared contribution retirement plans
The Young Pragmatic and Penniless Generation | 26
Recommendations Enabling young workers to save The studyrsquos findings reveal that the majority of young workers (66) are either saving consistently or aspire to start saving but face challenges including debt low pay and funding for significant life events and generational changes to the economic landscape and government and employer support If young people are to achieve a prosperous retirement their willingness to save should be met with better opportunities to save Here is what can be done by employers governments and young people themselves to address retirement planning concerns for younger adults
27 | The Young Pragmatic and Penniless Generation
Individuals Employers and governments
Determine how much income you need in retirement Auto-enroll employees into a workplace retirement plan Young people accept the need to save for retirement but donrsquot If an auto-enrollment workplace retirement plan is feasible
know how to act on that need They can become more retirement this can play a major role in getting young workers saving early
savvy simply by talking to friends and family (as do 24 of and regularly Combined with auto-escalation (the automatic
our respondents already) or employers going online to use annual increase in retirement plan contributions) and matching
retirement calculators or reading the personal finance media contributions it can lead to greater retirement readiness
Seek out a financial advisor Provide more flexible savings products through the workplace Young people are faced with life events that make it easy to Not all savings journeys start with a retirement plan particularly
feel overwhelmed by financial priorities in addition to retirement for young people who may think of retirement as lsquotoo far awayrsquo
planning Soliciting advice from a finance professional early in Employers can kick-start the savings habit in younger workers
life (17 of young employees have done so already) helps with by providing flexible easy to access and easy to understand
planning and priorities and making sense of long-term finances savings plans as a more attractive starter option
Start saving now and save consistently Make company retirement plans more portable As with all employees young people will strengthen their Young people move jobs much more often than previous
retirement readiness simply by saving regularly Today only 25 generations of employees so savings like DC retirement plans
of young people always save yet even small regular amounts need to follow employees when they change jobs
will improve retirement readiness over time
Make tax incentives more effective Ask your employer about workplace retirement savings plans All countries encourage long-term savings through tax relief but
and other retirement benefits young people often arenrsquot aware of this or donrsquot understand it
While one third (33) of young people believe that a workplace A more targeted system of tax relief could help provide clearer
retirement savings plan provides a major opportunity to start and simpler signals to younger people about the financial
saving employers often experience difficulties in engaging benefits of long-term saving
younger employees in discussions about retirement planning
The workplace is an important channel for achieving retirement Make better financial education central to the workplace readiness so be sure to max out on any employer contributions retirement offer
Young people who aspire to save may be prevented from
doing so by setting the wrong financial priorities Workplace
retirement education ndash alongside professional advice ndash can help
guide young people toward the right long-term priorities at an
earlier age in life
The Young Pragmatic and Penniless Generation | 28
29 | The Young Pragmatic and Penniless Generation
Glossary
Aegon Retirement Readiness Index (ARRI) c areer average retirement plan The ARRI assesses the relative levels of retirement A type of defined benefit plan that is based on an
preparedness of employees across different countries on a employeersquos average retirement earnings over the duration
scale from 1 to 10 The Index is based on three questions of plan membership Same as average salary plan
covering attitudes and three questions covering behaviors
defined ambition (DA) plan average salary plan A type of retirement plan in which retirement plan risks
A type of defined benefit plan that is based on an are shared between the employer and the employee
employeersquos average retirement earnings over the duration It offers greater certainty to savers around the final value
of plan membership Same as career average plan of their retirement assets than in DC plans and less
cost volatility for employers than with DB plans In the
a nnuity Netherlands Defined Ambition (DA) retirement plans are
A form of contract sold by life insurance companies that being introduced in order to help relieve the pressure on
guarantees a fixed or variable payment to the annuitant employers while still trying to provide employees with a
at some future time usually retirement All capital in the more secure retirement plan The United Kingdom too is
annuity grows tax-deferred looking at DA retirement plans as a solution
auto enrollment defined benefit (DB) plan An employer-sponsored retirement plan in which the An employer-sponsored retirement plan where the amount
employer is able to enroll an employee without that of future benefits an employee will receive from the plan is
employeersquos express authorization The employer determines defined typically by a formula based on salary history and
what percentage of the employeersquos salary or wages is years of service The amount of contributions the employer
contributed to the plan The employee is able to change is required to make will depend on the investment returns
this percentage and can opt out of enrollment in the plan experienced by the plan and the benefits promised
Contrast defined contribution plan
a uto-escalation A feature of a plan which automatically increases the defined contribution (DC) plan percentage of (retirement) funds saved from salary An employer-sponsored retirement plan such as a 401(k)
This feature generally uses a default or standard plan or a 403(b) plan in the United States in which
contribution escalation rate contributions are made to individual participant accounts
Depending on the type of DC plan contributions may be
B aby Boomers made by the employee the employer or both
A term used to refer to people generally born between
the end of World War II in 1945 and the mid 1960s The employeersquos benefits at retirement or termination of
Other generations Silent Generation - the generation born employment are based on the employee and employer
between 1925 and 1945 Generation X - the generation contributions and earnings and losses on those
born between 1965 and 1979 Millennials or Generation contributions See also 401(k) and 403(b) plan
Y - the generation born between 1980 and 2000 and often Contrast defined benefit plan
classified as the children of Baby Boomers
The Young Pragmatic and Penniless Generation | 30
401(k) plan An employer sponsored retirement plan that enables
employees to make tax-deferred contributions from their
salaries to the plan
403(b) plan An employer-sponsored defined contribution plan that
enables employees of universities public schools and
non-profit organizations to make tax-deferred contributions
from their salaries to the plan
final salary plan A type of defined benefit plan in which retirement
benefits are based on final retirement salary in the years
immediately before retirement benefits are received
Millennials A term used to refer to the people born from about 1980
to 2000 brought up using digital technology They are
often classified as the children of Baby Boomers
r etirement (or pension) plan Provides replacement for salary when a person is no
longer working due to retirement In the case of a defined
benefit retirement plan the employer or union contributes
to the plan which pays a predetermined benefit for the
rest of the employeersquos life based on length of service and
salary Payments may be made either directly or through
an annuity Retirement plan payments are taxable income
to recipients in the year received The employer or union
has fiduciary responsibility to invest the retirement plan
funds in stocks bonds real estate and other assets earn
a satisfactory rate of return and make payments to retired
workers Retirement plan funds holding trillions of dollars
are one of the largest investment forces in the stock
bond and real estate markets If the employer defaults in
the United States retirement plan payments are usually
guaranteed by the Pension Benefit Guaranty Corporation
(PBGC)
variable annuities (VA) An insurance contract in which the insurance company
guarantees a minimum payment at the end of the
accumulation period The payments may vary depending
on the financial performance of the managed portfolio
31 | The Young Pragmatic and Penniless Generation
About Aegon Transamerica Center for Retirement Studiesreg and Cicero Consulting
Aegon Transamerica Center Aegon is an international life insurance pensions and asset reg management company with businesses in over 20 markets for Retirement Studies in the Americas Europe and Asia Aegon companies employ The Transamerica Center for Retirement Studiesreg (TCRS) is
around 24000 people and serve millions of customers a division of the Transamerica Institute a nonprofit private
worldwide foundation TCRS is dedicated to educating the public on
wwwaegoncom emerging trends surrounding retirement security in the
United States TCRSrsquo research emphasizes employer-sponsored
In 2010 Aegon became a founding member of the Global retirement plans issues faced by small to mid-sized companies
Coalition on Aging which seeks to raise awareness of aging and their employees and the implications of legislative and
issues among policymakers and the general public A major aim regulatory changes Transamerica Institute is funded by
of the coalition is to transform the way we think and speak contributions from Transamerica Life Insurance Company and
about aging replacing the familiar rhetoric of lsquoproblemsrsquo with its affiliates and may receive funds from unaffiliated third-
a more positive discussion of lsquopossibilitiesrsquo and lsquoopportunitiesrsquo parties For more information about TCRS please refer to
wwwglobalcoalitiononagingcom wwwtransamericacenterorg
Cicero Consulting A leading consultancy firm serving the banking insurance and
asset management sector Cicero specializes in public policy
and communications consulting as well as global thought
leadership and independent market research Cicero was
established in 2001 and now operates from offices in London
Brussels Washington and Singapore As a market leader in
pensions and retirement research Cicero designed
and analyzed the research and contributed to the report
wwwcicero-groupcom
The Young Pragmatic and Penniless Generation | 32
Marta acebo Mark Green Patricia Plas
Paula alvarez douGlas henck scott roane
Frits bart wendel hoFMan thurstan robinson
Grace basile
lynette belFry
andrew berwick
Frans van der horst
tatsuo kai
herMan kaPPelle
Patti rowey
sarah russell
Joost van schaGen
robin boon Gaacutebor kePecs dick schiethart
bert-JaaP brons Marco keiM erik schouten
douG brooks
libby buet
kent callahan
JaiMe kirkPatrick
bas knol
roGer koch
anGela seyMour Jackson
kate sMith
renske stoker
Jeanne de cervens
dana chen
Peter kunkel
alexander kuiPers
eyleen sun
MartiJn tans
arkadiusz chMurzynski
heidi cho
brian lewis
Mike linder
GreG tucker
Mark twiGG
siMon clow siMon luke catherine wanG
robert colliGnon Jason Ma Marc van weede
catherine collinson GrzeGorz Mathea tiM willaert
wendy daniels
Michel denizot
edit drevenka
Paul Middleton
takaoh MiyaGawa
david Moulton
daniel wriGht
alex wynaendts
MacieJ zaPala
Jan driessen
kelly Fu
adrian Grace
Mark Mullin
Marcelle noltenius
stiG nybo
Peacuteter zatykoacute
vicky zeldin
Disclaimer This repor t contains general information only and does
not constitute a solicitation or offer No rights can be
derived from this repor t Aegon its par tners and any of
their affiliates or employees do not guarantee warrant
or represent the accuracy or completeness of the
information contained in the repor t
Acknowledgements
33 | The Young Pragmatic and Penniless Generation
References and notes i For a comparison of different retirement systems see lsquoPensions at a Glance 2011rsquo OECD 2011 ii As the survey was carried out online the survey results in China are based toward people living in urban areas iii ldquoPensions Marketsrdquo TheCityUK March 2013 p9 iv Global Employment Trends for Youth 2013 A generation at risk International Labour Organisation 2013 p2 v Eurostat July 2013 vi OECD Employment and Labour Markets Key Tables from OECD No 2 2012 vii The Federal Reserve Bank of New York 2012 Quarterly Report on Household Debt March 29 2013 viii World Bank ix lsquoWorld-class povertyrsquo The Economist February 27 2013
httpwwweconomistcomblogsanalects201302chinas-poor x lsquoThe Chinese slow down in char tsrsquo The Economist July 15 2013 xi lsquoChina rsquos welfare system difficult inflexible and blatantly unfairrsquo The Guardian April 23 2013
httpwwwtheguardiancomglobal-development2013apr23china-welfare-system-inflexible-unfair xii lsquo The Dutch experience with Defined Ambition pensions and the impact on companiesrsquo Aegon Global Pensions March 12 2013
httpwwwaegonglobalpensionscomenHomePublicationsNews-archiveNewsThe-Dutch-experience-with-Defined
Ambition-pensions-and-what-that-may-mean-for-companies-in-the-Netherlands-and-the-UK
shy
The Young Pragmatic and Penniless Generation | 34
Contact information HE ADQUARTER S
Aegon NV
PO Box 85
2501 CB The Hague
Telephone +31 70 344 32 10
w w waegoncom
MEDIA REL ATIONS
Telephone +31 70 344 89 56
Email gcc-iraegoncom
Countr y Index score
Germany 548
China 541
Canada 524
United States 519
The Netherlands 488
United Kingdom 486
Sweden 483
France 475
Hungar y 473
Poland 463
Spain 440
Japan 430
Total 489
Appendix 1 Aegon Retirement Readiness Index (ARRI) - technical note
Aegon Retirement Readiness Index (ARRI)-technical note 2013 Weightings (2012 in brackets) A sample of 12000 pre and post retirees was drawn from 1 Personal responsibilit y 20 (30)
twelve countries Of these 10800 (90) were pre-retirees 2 Level of awareness 30 (35)
and these were chosen for fur ther analysis of their plans 3 Financial capability Understanding 30 (25)
for retirement The Index that was developed forms an 4 Retirement planning 50 (50)
assessment of how well an individual perceives the adequacy 5 Financial preparedness 60 (60)
of his her own finances and financial awareness specifically 6 Income replacement 35 (35)
for addressing his retirement needs
Note that the weights devised to show the relative
The lsquotargetrsquo for the Index impor tance of each question in calculating the Index add to
The question on current savings activity was designated as the 225 These were then re-scaled so that a final scale of 1 to
target question (dependent variable) for predicting the level of 10 was calculated
preparedness for retirement Responses to this question were
then correlated with each of the six key questions (variables) Final scores by country below to understand which were driving the activity These weightings were multiplied by the actual scores for each
This was done because it was not felt to be correct to give respondent for each of the six Index questions and aggregated
each of the six variables described below an equal weight as to obtain a provisional score This was then adjusted to
they appeared to have quite different relationships to the give countr y scores out of 1 to 10 (A score of 1 to 10 had
target question sufficient differentiation to be used as the scale for analysis)
1 Personal responsibilit y for income in retirement
2 Level of awareness of need to plan for retirement
3 F inancial capability Understanding of financial matters
regarding plans for retirement
4 Retirement planning Level of development of plans
5 Financial preparedness for retirement
6 Income replacement Level of projected income replacement
The weighting To estimate the statistical significance of the decline in overall
scores in this yearrsquos Index is theoretically incalculable
Two things have changed from 2012 to 2013
1 C anada and China have joined the sample
2 The new countries have thus influenced the weights of
emphasis placed on the 6 variables used to calculate
the score hence the weights attached to the complex
calculation have changed
However it is noticeable that for countries which were sampled
in both time periods the mean scores for the six individual
variables have almost invariably declined and on average more
than half of them have shown a significant level of decline
In particular the question lsquoDo you think you will achieve this
incomersquo has for all countries shown a significant level of
decline We thus hypothesize that the comparative results
show a significant decline
The Young Pragmatic and Penniless Generation | 36
Net
herl
ands
Net
herl
ands
Net
herl
ands
Ger
man
yG
erm
any
Ger
man
yBase 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
Better off 7 4 23 Sw
eden
Swed
en11 5 7 8 3 11 14 50 5
Swed
en
About the same 19 18 27 23 8 19 18 13 29 29 24 21 U
ntie
dU
ntie
dU
nite
d Worse off 66 74 41 58 79 69 71 76 51 47 21 55
Kin
gdom
Kin
gdom
Kin
gdom
Donrsquot know 9 3 9 9 9 4 4 8 9 10 6 19
Fran
ceFr
ance
Fran
ce
Chart 2 Education of 20 ndash 29 year olds by country Q Please choose from the following list the highest level of educational or professional qualification you have
Spai
nSp
ain
Spa
in
Pol
and
Pol
and
Pol
and
Hun
gary
Hun
gary
Hun
gar y
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
dU
nite
d 100 100 100 100 100 100 100 100 100
Stat
es100 100 100
Stat
esSt
ates
Less than high school graduate 2 44 6 14 1 3 2 7 1 3 Ca
nada
Cana
daC
anad
aHigh school graduate 11 33 53 23 22 22 4 41 14 21 1 2
Some college or trade school 46 2 9 9 9 19 37 14 28 20 4 33 Ch
ina
Chin
aC
hina
College degree University degree 31 15 27 30 41 43 21 33 50 46 9 57
Postgraduate degree or 8 3 3 23 25 11 36 1 8 9 80 6 qualification Ja
pan
Japa
n Ja
pan
Other 2 4 1 1 1 2 0 5 0 6 2
None 0 1 1 0 1 0 0
NET Less than undergrad degree 61 82 70 47 34 46 43 66 42 45 11 37
NET Undergrad degree or higher 39 18 30 53 66 54 57 34 58 55 89 63
Chart 3 Aegon Retirement Readiness Index scores for young employees by country
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
NET Low Index (0-5) 80 64 79 81 85 78 81 73 65 61 61 87
NET Medium Index (6-7) 15 30 18 15 14 21 17 23 25 31 31 12
NET High Index (8-10) 4 6 3 3 1 2 2 4 10 8 7 1
Appendix 2 Country comparisons Chart 1 The majority of young employees believe that they will be worse off in retirement compared to their parents Q Do you think that future generations of retirees will be better off or worse off than those currently in retirement
37 | The Young Pragmatic and Penniless Generation
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsI always make sure that 27 34 27 26 17 14 19 22 35 33 32 20 I am saving for retirement
I only save for retirement G
erm
any
Ger
man
y21 27 20 13 17 21 16 6 17 24 20 24 occasionally from time to time
I am not saving for retirement now 6 11 8 11 5 15 9 4 10 8 9 5 although I have in the past Sw
eden
Swed
en
I am not saving for retirement 35 23 34 46 53 40 49 54 36 33 38 46 though I do intend to U
nite
dU
ntie
dK
ingd
omK
ingd
om I have never saved for retirement and 11 6 10 5 8 10 6 13 3 2 1 6 donrsquot intend to
Fran
ceFr
ance
Chart 5 Younger people are more likely not to be using any means of retirement savings Sp
ain
Spai
nQ Which financial means if any are you currently using to prepare for your retirement
Pol
and
Pol
and
only asked in Germany only asked in Spain
Hun
gary
Hun
gary
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
dSt
ates
Stat
es100 100 100 100 100 100 100 100 100 100 100 100
Defined benefit plan 16 10 25 29 15 3 76 11 20 13 5 Ca
nada
Cana
daDefined contribution plan 28 10 17 19 19 14 10 23 40 7 3
Private pension 8 18 14 10 5 9 4 13 12 40 66 4 Ch
ina
Chin
a Government pension social security 12 43 14 21 8 7 4 18 27 33 71 35
Stocks 5 12 14 7 4 17 7 2 13 10 23 9
Bonds 1 8 5 6 2 16 4 2 8 13 14 3 Ja
pan
Japa
n
Mutual funds 2 14 23 4 2 10 3 4 7 16 9 6
Investment insurances (annuities) 2 3 2 3 2 9 4 5 2 4 6 1
Savings accounts 23 37 38 25 23 6 29 15 36 37 65 36
Investment property 2 10 6 7 9 2 5 2 5 11 18 1
Employee stock purchase 1 1 1 4 1 29 0 4 1 7 1
My home 10 5 8 7 7 8 4 6 6 14 30 1
Reverse mortgage 1 4 2 4
My business 2 1 3 2 2 4 1 1 2 4 12 1
Inheritance 3 11 7 11 7 9 9 8 7 9 6 2
Annuities 1 15 2 2 1 4 3 2 1 2 8
Long-term care insurance 2 1 3 2 9 5 1 6 4 7 1
Life insurance 6 11 8 8 14 3 18 15 19 18 36 17
Unterstuumltzungskasse aus 2 Eigenmitteln finanziert
Unterstuumltzungskasse vom 2 Arbeitgeber finanziert
Chart 4 Younger employees are much more likely to aspire to save for retirement Which of the following best explains your approach to saving for retirement This can include money you contribute to any long-term
investment including pensions stocks and shares investment-linked insurances property etc
Q
The Young Pragmatic and Penniless Generation | 38
Plan de empleo mixto 2 (combinacioacuten de las dos anteriores)
Other 1 6 4 0 1 2 2 3 2 2 3 3
None nothing 8 14 12 23 25 31 6 27 21 17 3 24
Donrsquot know 29 6 17 13 19 8 4 9 7 7 0 9
hart 6 The younger generation has more negative associations of retirement Which if any of the following words do you most associate with retirement
Net
herl
ands
Net
herl
ands
Ger
man
yG
erm
any
Swed
enSw
eden
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
d100 100 100 100 100 100 100 100 100 100 100 100
Kin
gdom
Kin
gdom
Freedom 35 32 36 39 19 26 11 20 35 40 37 33
Opportunity 7 27 25 18 4 8 9 10 17 16 9 16 Fr
ance
Fran
ceLeisure 58 48 36 41 23 24 43 32 50 50 55 6
Excitement 2 5 3 8 2 6 1 2 17 17 4 3 Sp
ain
Spai
nPoverty 11 26 23 11 26 14 37 44 7 5 6 20
Insecurity 34 24 18 16 20 18 35 56 10 9 18 44 P
olan
dP
olan
dLoneliness 4 10 17 16 12 7 11 8 5 9 20 12
Ill health 2 19 7 14 15 9 49 23 6 6 29 11 H
unga
ryH
unga
ryDependent on others 11 11 5 18 14 8 18 19 14 6 11 4
Tired 3 4 8 10 14 10 17 6 7 7 13 19 U
nite
dU
nite
dFar away 38 19 25 21 61 32 2 13 33
Stat
es33 14 22
Stat
es
Boredom 14 16 6 12 16 12 15 8 12 12 16 17 Ca
nada
Cana
daEnjoyment 21 16 17 23 14 29 5 3 37 37 35 15
None of the above 0 1 1 2 0 2 1 1 2 2 1 2
Donrsquot know 2 2 3 3 2 2 1 2 0 Ch
ina
6 Ch
ina
hart 7 Many young employees think they are not on course to achieve target retirement income Ja
pan
Japa
n Do you think you will achieve this income [your estimated income needed in retirement]
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
I donrsquot know if I am on course to 56 37 57 59 50 39 49 48 48 41 22 68 achieve my retirement income
No I am on course to achieve around one-quarter (25) of my 10 14 9 13 15 14 14 13 10 10 10 7 retirement income
No I am on course to achieve around 12 20 14 11 19 19 18 15 12 11 23 12 half of my retirement income
No I am on course to achieve around three-quarters (75) of my 8 14 7 4 8 15 9 8 6 11 20 5 retirement income
Yes I am on course to achieve my 15 15 13 14 8 13 11 17 25 27 25 8 retirement income
CQ
CQ
39 | The Young Pragmatic and Penniless Generation
Chart 8 Young people in most countries expect to retire before 65 Q At what age do you expect to retire from all paid employment
Net
herl
ands
Ger
man
y
Swed
en
Uni
ted
Kin
gdom
Fran
ce
Spai
n
Pol
and
Hun
gary
Uni
ted
Stat
es
Cana
da
Chin
a
Japa
n
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
40 or under 0 1 1 0 0 1 3 1 5 12
41-50 1 2 3 5 2 2 6 3 9 4 37 9
51-59 4 4 4 6 2 4 11 5 7 10 30 1
60 5 11 8 12 10 13 19 12 12 16 21 27
61-64 2 11 10 2 20 7 4 13 5 3 1 2
65 17 22 44 31 34 32 16 26 26 32 3 25
66-69 42 32 15 9 12 29 20 13 9 9 0 1
70 19 11 10 18 10 5 10 9 13 12 0 6
71+ 5 5 5 9 4 5 5 3 7 5 1 4
Never 2 1 1 2 2 2 6 4 1 0 0
Donrsquot know 2 3 2 5 3 2 8 9 5 5 1 13
Mean 67 65 65 65 64 65 63 64 63 64 53 59
Median 67 65 65 65 65 65 65 65 65 65 55 60
Chart 9 Younger employees feel they donrsquot have money to invest for retirement Q What is the single biggest obstacle to you saving for retirement right now
Net
herl
ands
Ger
man
y
Swed
en
Uni
ted
Kin
gdom
Fran
ce
Spai
n
Pol
and
Hun
gary
Uni
ted
Stat
es
Cana
da
Chin
a
Japa
n
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
The uncertain economic environment 19 8 13 9 13 19 11 14 12 9 29 27
Lack of money to invest 28 41 33 43 47 34 48 55 47 50 6 19
Fear of poor investment returns over the coming years 2 5 10 7 5 6 8 2 6 8 14 6
Complexity of investment products 4 4 4 3 5 3 5 2 12 5
I donrsquot know how to go about investing for the long-term 2 3 10 8 5 5 3 3 6 8 7 9
The fees charged by financial services companies 2 4 4 2 4 3 4 2 3 5 2 5
I canrsquot afford to take financial advice 3 3 6 8 2 4 3 5 3 2 3 2
I donrsquot trust the financial services industry 12 11 8 6 5 10 6 2 2 3 5 4
I donrsquot see the need to save for the long-term 6 1 2 2 3 3 3 1 2 1 4 3
Concerns about unstable currencies currency fluctuations 2 5 1 3 3 3 4 3 4 5 15 2
Other (PLEASE STATE) 3 3 1 1 3 2 4 6 2 2 1
Donrsquot know 17 12 11 7 8 6 3 6 8 6 3 17
The Young Pragmatic and Penniless Generation | 40
Chart 10 More money would incentivize young employees to save for retirement Q Which if any of the following would encourage you to save for retirement
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsMore generous tax breaks on long-term savings and pensions 20 44 30 32 27 23 42 42 33 43 40 32 products
Ger
man
yG
erm
any
Access to financial education so that I am more aware of what 24 6 14 21 16 22 21 12 23 24 43 25 I need to do for myself
Swed
enSw
eden
Access to professional financial advice so that I have personalized
Uni
ted
20 24 23 23 15 21 25 9 22 23 44 13 U
nite
drecommendations on what steps
Kin
gdom
Kin
gdom
I need to take
Simpler investment products that 12 33 19 28 20 Fr
ance
18 27 16 32 28 36 10 Fr
ance
I can understand with less jargon
Better and more frequent information about my retirement 16 28 20 27 27 23
Spai
n20 18 25 31 45 22
Spai
nsavings
Better legal protection in case I am 12 18 13 18 10 24 18 13 13 19 21 6 P
olan
dP
olan
dsold the wrong product
A pay rise 46 54 44 64 55 50 70 72 67 64 53 37
A better retirement plan pension H
unga
ryH
unga
ry27 32 25 33 29 26 42 35 39 44 33 32 match from my employer
Other 4 2 1 1 2 2 3 3 2 U
nite
d3 0
Uni
ted
Stat
esSt
ates
Donrsquot know 17 9 16 10 10 12 3 8 8 5 3 17
Not applicable - I already have 3 3 4 2 2 1 1 1 2 2 3 sufficient savings Ca
nada
Cana
da
Chin
aCh
ina
Chart 11 A majority of younger employees do not have a written plan for retirement Q Which of the following best describes your retirement planning strategy
Japa
n Ja
pan
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
I have a written plan 7 18 10 9 6 8 6 5 13 10 8 4
I have a plan but it is not written 24 47 37 25 23 31 29 31 37 44 55 24
down
I do not have a plan 61 32 51 61 62 55 62 58 45 42 34 61
Donrsquot know 7 3 3 5 8 6 3 6 4 4 3 12
41 | The Young Pragmatic and Penniless Generation
Chart 12 For young employees friends and family are the leading source of retirement savings information Q And which of these sources (of information) is most important to you
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
Bank adviser 6 11 19 5 25 5 7 4 3 17 10 2 N
ethe
rlan
dsN
ethe
rlan
dsProfessional financial adviser 12 22 10 12 10 19 19 22 21 25 19 10
Insurance agent spokesperson 3 10 2 3 1 3 6 2 3 0 3 2 G
erm
any
Ger
man
yInsurance company website 3 1 3 2 4 4 2 2 1 3 1
Personal finance websites online 8 5 7 8 5 4 10 8 12 6 10 8 retirement planning tools Sw
eden
Swed
enPersonal finance media 2 2 2 2 2 6 3 1 2 1 6 2
Government website 7 1 3 6 U
nite
d5 2 3 3 2 3 7 1
Uni
ted
Kin
gdom
Kin
gdom
Bank website 2 3 3 2 1 0 3 2 1 6 3 3
My employer 12 8 4 9 4 7 5 12 8 5 4 1 Fr
ance
Fran
ceAccountant 2 6 4 4 1 3 1 3 5 5 1 3
Lawyer 2 3 1 2 2 8 4 2 1 2 2 0 Sp
ain
Spai
nFriends and family 21 22 30 28 24 26 18 24 26 20 25 24
None of these P
olan
dP
olan
dNot applicable 21 7 16 18 19 13 17 15 14 9 5 41
Hun
gary
Hun
gary
Chart 13 Most young workers feel their employer should provide some kind of pension Q In the future what if anything should employers do to help people plan for retirement
Uni
ted
Uni
ted
Stat
esSt
ates
Cana
daCa
nada
Chin
aCh
ina
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 Ja
pan
Japa
n Employers should be required to 24 43 20 40 21 26 20 28 37 34 20 30 contribute to workersrsquo pensions
Employers should be required to make a pension available but not to 12 13 7 17 20 15 15 4 11 14 22 5 contribute into it
Employers should not be required to provide pensions but should 15 9 12 8 9 8 11 6 11 9 9 11 provide information on how to plan for retirement
Employers should provide a range of flexible benefits and 13 18 18 16 15 27 25 28 21 22 45 12 allow individuals to choose which benefits they actually want
Nothing ndash it should be left to individual employees to take care 2 2 5 1 4 3 3 5 6 5 1 9 of themselves
Nothing ndash it should be left to the government to take care of its 2 5 5 2 5 8 15 14 1 4 0 4 citizens
Donrsquot know 30 10 32 17 27 12 12 15 13 13 3 29
The Young Pragmatic and Penniless Generation | 42
Chart 14 Workplace pensions are relatively low down in young workersrsquo priorities when choosing a job Q How important to you would the following workplace benefits be if you were choosing your next job
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsBasic salary 86 93 88 91 88 92 90 94 90 93 96 94
Holiday entitlement 87 94 89 91 92 94 91 94 93 94 96 91 G
erm
any
Ger
man
yOvertime and bonus pay 86 93 87 88 89 90 89 94 90 91 97 90
Location of workplace 88 91 86 92 89 90 89 92 93 93 92 86 Sw
eden
Swed
enMedical health insurance 73 92 84 65 86 87 88 87 93 94 98 83
Opportunities for career progression 86 91 81 90 90 94 91 94 92 91 96 81 U
nite
dU
nite
dAccess to a workplace retirement 85 85 81 82
Kin
gdom
78 84 80 78 84 86 93 74 K
ingd
omplan with employer contributions
Access to good training provision 85 87 85 88 86 91 85 93 86 90 95 74 Fr
ance
Fran
ceFlexible working hours 79 87 58 86 81 89 81 87 91 91 92 57
Life insurance 72 75 79 69 80 82 Sp
ain
84 80 81 88 93 74 Sp
ain
(death in service benefits)
Phased retirement or other employer programs providing for 74 54 75 71 72 81 76 74 76 81 91 65
Pol
and
Pol
and
a transition into retirement
Ability to work past the normal 68 57 64 65 64 74 72 65 74 76 80 70 retirement age H
unga
ryH
unga
ry
Access to a workplace retirement 62 74 61 68 59 77 61 47 68 74 89 65 plan without employer contributions U
nite
dU
nite
dSt
ates
Stat
esEmployee share plans 50 72 54 65 59 73 61 51 64 73 91 55
Access to creche help with the 67 75 64 56 69 79 75 83 58 69 89 68 cost of childcare Ca
nada
Cana
da
Opportunities for foreign travel 53 54 60 55 50 71 58 66 57 61 79 37
Company car 51 46 45 47 49 63 51 49 36 49 69 Ch
ina
39 Ch
ina
Japa
n Ja
pan
Chart 15 Young workers think the state pension will need to be reformed Q With the cost of government pensions becoming a greater concern as people live longer which if any of the following do you think
the government should undertake
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
The government should reduce the overall cost of state pension 15 33 16 15 16 20 28 22 21 26 30 16 provision by reducing the value of individual pension plans
The government should increase overall funding available for the 12 21 30 22 14 34 19 26 21 18 29 10 state pension through raising taxes
43 | The Young Pragmatic and Penniless Generation
he government should take a alanced approach with some 27 26 12 30 28 23 24 16 34 31 38 41 eductions in individual payments nd some increases in tax
he government should not do nything State pension provision 7 2 12 5 3 4 3 3 5 4 0 5 ill remain perfectly affordable in he future
onrsquot know 38 19 29 29 39 20 26 34 19 21 4 28
Net
herl
ands
art 16 Products which protect against investment risk are the most important to young workers ( interested) Thinking about the types of financial products you could purchase to help provide you with security in retirement on a scale of 1 to 5
how interested are you in the following options G
erm
any
Swed
en
Uni
ted
Kin
gdom
ase 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 Fr
ance
100 100 100 100 100 100 100 100 100 100 100 100
product providing a guaranteed etirement income stream or 75 81 73 76 74 83 78 76 87 85 94 69
Spai
nifetime income in retirement
product which protects my 74 79 73 76 72 82 77 74 84 86 94 65 etirement income against inflation P
olan
d
product which guarantees that I 72 82 73 78 75 81 76 73 86 86 90 67 onrsquot lose my initial investment H
unga
ry product which helps meet the ost of long-term care if I become 74 79 74 77 70 79 76 71 86 85 84 66
Uni
ted
nable to look after myself St
ates
product which protects my capital 71 81 71 76 68 76 77 73 84 83 93 65 rom poor investment returns Ca
nada
product which generates a etirement income and allows 69 78 71 75 68 81 77 72 84 86 94 70 e to take a lump sum from the
Chin
anvestment should I need to
product where the annual 66 78 68 75 72 79 77 70 85 86 87 64 anagement charges are kept low Ja
pan
product which enables me to eep some control over how my 71 73 70 75 72 80 75 69 88 85 91 63 avings are invested during my etirement
product which manages the sset allocation so that I am never 68 70 67 73 66 76 71 67 80 83 95 60 xposed to a level of risk Irsquom not omfortable with
product which continues to rovide a retirement income to my 74 78 71 75 73 81 79 73 86 82 94 60 pouse in the event that I die first
product which protects my family gainst having to pay estate taxes 73 76 71 74 75 81 75 69 82 82 89 56 hen I die
product which locks in investment 72 71 63 73 64 71 59 56 81 84 89 61 eturns during the good years
Tbra
Tawt
D
ChQ
B
Arl
Ar
Ad
Acu
Af
Armi
Am
Aksr
Aaec
Aps
Aaw
Ar
The Young Pragmatic and Penniless Generation | 44
The structure and methodology of this report specialized public policy interventions Thus the research reflects
The Young Pragmatic and Penniless Generation polled employees views of the mainstream working population
and retirees in 12 countries Canada China France Germany
Hungary Japan the Netherlands Poland Spain Sweden the A guide to this report United Kingdom and the United States These countries were The reportrsquos conclusions and recommendations flow from an
selected on the basis of having distinctive retirement systems examination of todayrsquos young employees in the context of older
as well as varying demographic and aging trends i and retired employees
bull Par t 1 of this report explores the financial pressures that Respondents were interviewed using an online panel survey young people face from unemployment intermittent
in their native language ii in January and February of 2013 employment and extended full-time education
The sample comprised 10800 employees including 2722 people bull Par t 2 reviews the savings outlook including young employeesrsquo between the ages of 20 and 29 and 1200 retirees The 12 attitudes toward saving expectations for retirement income
countries surveyed represent employees who cumulatively have and retirement age and perceived responsibilities toward
access to around 85 of the worldrsquos private retirement assets iii parent care
(excluding government retirement benefits) bull Par t 3 examines some of the potential savings obstacles such as household economics and the income position of
Issues covered included attitudes toward retirement the individual employee and the importance of advice and
preparedness the role of government and employers in the education in altering youth perceptions of financial priorities
provision of retirement benefits and the impact of the financial bull Par t 4 explores how to encourage young people to save and crisis on attitudes to investment risk and retirement planning the role of employers in this
The survey did not include the self-employed unemployed
or long-term incapacitated since each of these groups faces The final part sets out recommendations for improving the
specific retirement planning challenges which may require retirement readiness of this important group within society
The Young Pragmatic and Penniless Generation | 6
Part 1 Young people at risk in an uncertain world As societies enjoy the benefits of longer life expectancy people will need to work harder to secure a comfortable retirement This will mean saving more during working life and a redefinition of how to approach retirement When it comes to achieving this important life goal however some groups are more at risk This report examines one such group in detail young employees at the beginning of their working life
7 | The Young Pragmatic and Penniless Generation
Countr y Median Income
lsquo(nearest 000) Married Undergrad degree or more Dependent children (any)
All 20-29 year olds $27500 25 53 25
Netherlands $37000 17 39 20
Germany $38000 33 18 27
Sweden $39000 16 30 32
United Kingdom $48000 24 53 24
France $28000 23 66 26
Spain $23000 13 54 25
Poland $13000 38 57 28
Hungary $6000 31 34 16
United States $43000 26 58 27
Canada $51000 36 55 27
China $18000 31 89 30
Japan $37000 12 63 11
Who are younger employees are also more likely than average to be single and much less
This report defines younger employees as people between likely to have children A quarter are married compared to an
20 and 29 years of age a group that belongs to the Millennials average of 64 for the generation now in their 50s
generation born between 1980 and 2000 This group differs
widely among countries although there are clear trends Education levels vary across the countries included in this research
Many have been in the labor market just a few years after a long due to differences in higher education systems (Chart 1) Overall
period of higher education Unsurprisingly median household those aged 20-29 were more likely than the average respondent
incomes are lower around $27500 according to this research to have at least an undergraduate degree The increasing
compared to an overall median of $46000 Twentysomethings prevalence of education has both positive and negative impacts
Chart 1 A portrait of younger employees Q Which of the following reflects your annual household income before taxes
Q What is your marital status
Q Please choose from the following list the highest level of educational or professional qualification you have
Q How many children do you have who are financially dependent on you Please include all children and stepchildren
Why are young people at risk Such changes will not be achieved easily in the current climate
Todayrsquos young people face a challenging set of circumstances The global financial crisis of 2007-8 not only created a need
An aging society means fewer employees supporting more for long-term structural retirement reforms it also led to the
retirees which is profoundly affecting how societies fund more immediate menace of historically high levels of youth
retirement In most of the countries surveyed lsquotraditionalrsquo unemployment The International Labour Organization (ILO)
retirement provision such as government retirement benefits estimated that in 2013 unemployment affected 73 million young
and other forms of social security or employer-sponsored people aged 15-24 worldwide representing more than 126
retirement arrangements like defined benefit company of all young people iv Across the EU 228 of people under 25
retirement plans are already subject to long-term reforms were unemployed in 2012 and in Spain the figure was 53 v
These reforms will reduce the value of future entitlements It is worth noting that the study is conducted among those who
by lowering retirement income benefits and raising the age are currently employed (part- or full-time) so the findings do not
of retirement and are likely to begin to take full effect from fully take into account the significant number of unemployed
the middle of this century just as the current generation young people
of twentysomethings enters retirement Consequently the
retirement prosperity enjoyed by todayrsquos Baby Boomers will not
be shared by subsequent retiring generations unless there is a
major change in their savings behavior
The Young Pragmatic and Penniless Generation | 8
13
4
16
3
Chart 2 Youth unemployment in 2005 and 2012 across Aegon survey countries (excluding China)
60 1
24
14
3
2005 2
06
2012
23
8
45
15
2
81
19
4
30 2
81
86
79
15 9
4
95
37
8
0 2
65
y
Japan
Spain
19
7
Canad
a
Fran
ce
Poland
Germ
any
Hunga
r
Sweden
OECD tota
l
Nether
lands
53
2
United S
tate
s
United K
ingdom
22
Note Youth unemployment rate of youth labour force (age 15 - 24) vi
23
7
12
2
21
11
3
16
2
The problems of high levels of youth unemployment and economic uncertainty affect those with jobs as well as those without
as they breed lower levels of job security and downward pressure on wages They also have a significant impact on the psychology and
confidence of younger people including those in work and their confidence in their short-term and retirement finances As the survey
findings reveal most young employees expect to find themselves worse off than their parentsrsquo generation when they enter retirement
(Chart 3)
Chart 3 The majority of young employees believe that they will be worse off in retirement compared to their parents Q Do you think that future generations of retirees will be better off or worse off than those currently in retirement
Base 20-29 year olds
Donrsquot knowBetter off
8 13
Total Respondents
2722
20 About
the same
59
Worse off
9 | The Young Pragmatic and Penniless Generation
Another major influence on the ability of young employees to save for retirement is the growth of higher education One positive
is that college graduates are more likely to benefit from lower unemployment rates fare better during economic downturns and
experience higher incomes across their lifetime supporting aspirations like home ownership vii and helping to sustain long-term
savings and increased levels of retirement preparedness (Chart 4)
Chart 4 Graduates are likely to enjoy a greater sense of retirement preparedness Q Thinking about how much you are putting aside to fund your retirement are you saving enough
Base All lsquovery prepared for retirementrsquo
30 27
17 16Postgraduate degree or qualification
College degree University degree Some college or trade school
8 High school graduate
1 Below high school graduate Other
Conversely full-time education delays entry into the labor Why is this group of young employees important arket causing a loss of several years of full-time earnings By the middle of the century todayrsquos 20-29 year olds will
otential Moreover ballooning levels of student debt may have led the world economy through an economic recovery
ignificantly delay the onset of post-graduation saving and dramatic demographic shifts during a period of greater
etween 2004 and 2012 for example student debt in the uncertainty for modern retirement systems and other issues
nited States tripled to $966 billion nationwide The effect In developing countries such as China this group will be more
f this is that todayrsquos younger employees must take greater affluent than their parents but still need to deal with the
ersonal responsibility for their savings a challenge in the consequences of a rapidly aging population and an economy
urrent economic and financial circumstances which has passed its phase of rapid growth
For all of their challenges however this group of young people
represents the biggest opportunity to change societal savings
behaviors for the better The Aegon Retirement Readiness Survey
2013 provides insights into how best to achieve this through a
greater understanding of the grouprsquos outlooks and savings habits
m
p
s
B
U
o
p
c
The Young Pragmatic and Penniless Generation | 10
45
29
20
6
50
24
21
6
56
19
21
4
46
27
21
6
Better off About the same
Worse off Donrsquot know
All work
ers
20-29 ye
ar old
s
Male 2
0-29 ye
ar old
s
Fem
ale 2
0-29 ye
ar old
s
Chinarsquos young employees bucking the gloomy trend optimistic that their economy will continue to expand over
A key finding of this yearrsquos Aegon Retirement Readiness the next 30 years Concerns about the sustainability of
Survey is that Chinese employees are far more confident growth remain however Just 37 of Chinese 20-29 year
and optimistic about their financial future than employees olds believe that the Chinese economy will improve over
in other countries This is also true of younger employees the next 12 months ndash indeed 2013 will see the economyrsquos
Of those Chinese aged 20-29 half (50) believe that they slowest expansion since 1990 x Long term Chinarsquos rapidly
will be better off in retirement than those currently in aging population makes creating a comprehensive and
retirement Younger Chinese men are the most optimistic sound retirement system an urgent priority xi Coverage has
with 56 believing that they will be better off expanded in the past 10 years with reforms such as the
introduction of the Enterprise Annuity in 2005 yet it is still
This optimism is relatively justified Since 1980 Chinese GDP not clear how China will build a universal retirement system
per capita has increased thirty-fold from $193 to $6091 across both the government-sponsored and private sectors
in 2012 viii While this dramatic increase has not benefitted However the success of reforms carried out to date suggests
all Chinese equally ndash by the Chinese governmentrsquos measure that tax incentives and efforts to improve awareness are
99 million rural Chinese live in poverty ix ndash huge progress required as part of any long term solution
has been made and young people in China are generally
Chart 5 Chinarsquos younger employees are confident of a better retirement Q Do you think that future generations of retirees will be better off or worse off than those currently in retirement
Base Respondents in China
11 | The Young Pragmatic and Penniless Generation
Part 2 The savings outlook of young employees This chapter explores the financial behaviors and savings gaps and needs of 20-29 year olds through their attitudes toward financial issues the wider economy and the savings required for a comfortable retirement
The Young Pragmatic and Penniless Generation | 12
75
21
4
69
27
4
64
31
4 5
7
36
7
20-29
30-39
40-49
50-59
44
40
16
NET Low Index (0-5)
NET Medium Index (6-7)
NET High Index (8-10)
60-69
Retirement readiness and young employees However many young employees have concerns about achieving
Retirement is seen as a major life stage by young employees this Over a third (38) are pessimistic that they will not have
They typically expect to spend an average 20 years of their lives enough to live on in retirement and 44 are pessimistic about
in retirement a definition of retirement that is consistent across being able to choose when they retire Furthermore 28 have
all working age groups Retirement conjures broadly positive made no plans at all for their retirement which may help explain
associations Fully 63 of employees in their twenties aspire some of these concerns Health worries are less of an issue with
to travel during retirement 39 see it as a period of leisure 52 being optimistic that they will enjoy good health in old age
and 30 associate it with freedom The need to plan and save although 20 believe that they will not which is perhaps related
for this phase of life is also widely accepted Half (50) of to the 17 who associate retirement with ill health in general
employees in their twenties are aware of the need to save and
64 feel a high or very high degree of personal responsibility Overall 75 of employees in their twenties achieved a low
to ensure sufficient income for retirement retirement readiness score of 0-5 on the Aegon Retirement
Readiness Index (please refer to the glossary and Appendix 1 for
an explanation of the Index) The percentage of employees with a
low score of 0-5 drops with each increase in age group and is 44
among those in the lsquoat retirementrsquo group of 60 to 69 year olds
Chart 6 Aegon Retirement Readiness Index scores for employees across age groups For more information on the ARRI see page 36
Base All aged 20 - 69
Life stage and savings attitudes Getting married and starting a family are two such events
he Retirement Readiness Index reveals that retirement Of employees in their twenties 25 are married and
reparedness is to some extent age- and life stage-related 25 have children whereas for those in their 30s 54 are
hart 6) For younger employees the idea that retirement is married and 56 have children representing a major shift
r awayrsquo combined with lower earnings and other spending toward parenthood
riorities (such as higher education or purchasing a house)
an be powerful obstacles to saving for retirement Thus while Encouragingly while young employees are less likely to
5 of all employees say that they lsquoalways make surersquo that they have started saving for retirement many see themselves as
re saving for retirement just 25 of 20-29 year olds do so future lsquoaspiringrsquo savers Fully 41 intend to save in the future
t present over half (57) of 20-29 year olds are not saving compared to 27 of all employees and only 7 do not intend
r retirement compared to 46 of all employed adults to save for retirement This large group of aspiring savers
ven in China where 44 are always saving for retirement who are committed to the idea of putting money aside for
st 32 of 20-29 year olds do so retirement challenges the view that young people are unwilling
to save Furthermore since converting these young employees
his life cycle effect can be seen in numerous ways At the from aspiring savers to regular savers may depend on the
utset of adult life employees experience lower income and right economic conditions and appropriate financial incentives
igher spending as they prioritize and fund life events with a helping them is a major opportunity for governments and
ignificant impact on their ability or desire to save for retirement employers
T
p
(C
lsquofa
p
c
3
a
A
fo
E
ju
T
o
h
s
13 | The Young Pragmatic and Penniless Generation
35 25 20 19 12 9 27 41 7 7
I always make sure I only save for I am not saving for I am not saving for I have never saved that I am saving retirement occasionally retirement now although retirement though for retirement and for retirement from time to time I have in the past I do intend to donrsquot intend to
All 20 to 29 year olds
NET Low Index (0-5)
NET Medium Index (6-7)
NET High Index (8-10)
Chart 7 Younger employees are much more likely to aspire to save for retirement but the majority are not saving Q Which of the following best explains your approach to saving for retirement This can include money you contribute to any
long-term investment including pensions stocks and shares investment-linked insurances property etc
Other findings support the assertion that younger savers This can be seen in Chart 8 More 20-29 year olds claim that
are open to increasing their retirement savings Over a third they are not likely to be saving for retirement by any means
(37) of 20-29 year olds feel lsquovery responsiblersquo for ensuring (17 against 12 for all adults) and are generally less likely
a sufficient retirement income Note however that this does to use any of the savings products mentioned Revealingly
not translate into better developed financial plans and savings 20-29 year olds are far less likely to name lsquogovernment benefits
strategies Only 7 in this age group feel they have lsquowell in retirementrsquo as a source of retirement income although almost
developedrsquo personal retirement plans and 33 say they are all respondents have some such entitlement This may be due
lsquohardly saving anythingrsquo for retirement Clearly awareness of the to unawareness of government benefits and or greater
retirement situation does not translate into actual retirement scepticism about governmentsrsquo ability or willingness to
planning activity provide for them in old age
The Young Pragmatic and Penniless Generation | 14
Chart 8 Younger people are more likely not to be using any means of retirement savings Q Which financial means if any are you currently using to prepare for your retirement
33 Savings accounts 31
36 Government pension social security 24
25 Defined benefit plan 21
22 Private pension 17
23 Defined contribution plan 15
20 Life insurance 15
14 Stocks 10
14 My home 9
12 Mutual funds 8
9 Inheritance 7
9 Bonds 7
8 Investment property 7
5 Employee stock purchase 5
5 Investment insurances (annuities) 4
4 Long-term care insurance 4
6 Annuities 3
My business 2 3
Reverse mortgage 1 1
Other 3 2
12 None nothing 17
6 Donrsquot know 10
All 20 to 29 year olds
Leisure
Freedom
Far away
Insecurity
Enjoyment
Poverty
Ill health
Boredom
Opportunity
Dependent on others
Loneliness
Tired
Excitement
None of the above
Donrsquot know
Retirement associations What does the younger generation feel about retirement and want to get out of it Perhaps unsurprisingly 20-29 year olds are more
likely to be negative than older respondents associating retirement with boredom loneliness and ill health They are also far more
likely to believe retirement is lsquofar awayrsquo which is likely to be a barrier to retirement saving
15 | The Young Pragmatic and Penniless Generation
Chart 9 The younger generation has more negative associations with retirement Q Which if any of the following words do you most associate with retirement
44 Leisure 39
36 Freedom 30
17 Far away 26
25 Insecurity 25
25 Enjoyment 21
19 Poverty 19
15 Ill health 17
9 Boredom
13
16 Opportunity
13
10 Dependent on others
12
9 Loneliness
11
0
r olds
7Tired
1
6Excitement
6
2None of the above
1
2Donrsquot know 2
All 20 to 29 yea
Aspirations and responsibilities for retirement Income levels in retirement ung people have similar retirement aspirations to the general A high proportion (47) do not know if they are on course
pulation for example travel (63) spending time with to achieve their retirement income goal Combined with the
iends and family (61) and pursuing new hobbies (52) high level of financial responsibility young employees expect
r them however retirement also includes the responsibility of to assume in retirement it is clear that people not only need
ring for others Two-fifths (40) believe that lsquoadult children to build much greater awareness of what kind of financial
retirees should help through providing financial support to pressures they are likely to face in retirement but also require
eir parents if neededrsquo and 28 believe that this will affect greater support in establishing realistic retirement income
em directly in retirement through providing financial support targets which are capable of meeting their needs
their parents A fifth (21) also expect to spend some of
eir retirement caring for other family members while just
donrsquot expect to provide for anyone compared to 40 of all
ployees Clearly todayrsquos young employees anticipate serious
ancial responsibilities in their retirement
Yo
po
fr
Fo
ca
of
th
th
to
th
30
em
fin
The Young Pragmatic and Penniless Generation | 16
Chart 10 Many young employees do not think that they are on course to achieve target retirement income Q Do you think you will achieve this income [your estimated income needed in retirement]
Base 20-29 year olds
Yes I am on course to achieve my retirement
income
16
47
12
16
10
I donrsquot know if I am on course to achieve my
retirement income
No I am on course to achieve around
one-quarter (25) of
No I am on course to achieve around half of my
retirement income
No I am on course to achieve around
three-quarters (75) of my retirement income
532
China
586
Japan
United S
tate
s
628
Poland
635
Canad
a
636
Hunga
r
638
y
Fran
ce
645 647
Spain
Sweden
649
United K
ingdom
651
Germ
any
653
Nether
lands
666
my retirement income
When will young people retire Media reports about the need to raise the age of retirement appear to have influenced younger employees Fully 44 of 20-29 year
olds do not expect to be able to choose their retirement date although the younger generation do expect to retire at a similar age
to older employees 63 This varies considerable by country In the Netherlands young employees expect to retire eight years later
than those in Japan Some countries such as China and Japan have surprisingly low expected retirement ages suggesting that young
employees may benefit from having a better understanding of when government or workplace retirement benefits kick in
Chart 11 Young people in most countries expect to retire before 65 Q At what age do you expect to retire from all paid employment
Base 20-29 year olds
Despite expecting to retire at the same age as their parents younger employees are more open to a transition into retirement
reflecting their more flexible outlook toward work Around half (51) are happy to change the way they work in some way as they move
into retirement Just 8 expect to keep working as they do currently
17 | The Young Pragmatic and Penniless Generation
Part 3 What is holding young employees back Insights into what young employees feel is holding them back from saving or saving more can be used to encourage younger people to adopt more positive savings behaviors This chapter explores the attitudes of young employees toward the financial obstacles they face and asks what actions they have taken in preparation for retirement The findings reveal that while the majority lacks adequate planning for their retirement needs financial shortcomings are only part of the stor y Spending preferences play a key role in the savings gap of advanced economies
The Young Pragmatic and Penniless Generation | 18
Lack of money to invest 37
16 The uncertain economic environment
7 Fear of poor investment returns over the coming years
6 I donrsquot trust the financial services industry
6 I donrsquot know how to go about investing for the long-term
4 oncerns about unstable currencies currency fluctuations
4 Complexity of investment products
4 I canrsquot afford to take financial advice
3 The fees charged by financial services companies
3 I donrsquot see the need to save for the long-term
Other 2
Donrsquot know 8
A pay rise
More generous tax breaks on long-term savings and pensions products
A better retirement plan pension match from my employer
Better and more frequent information about my retirement savings
Simpler investment products that I can understand with less jargon
Access to professional financial advice so that I have personalized recommendations on what steps I need to take
Access to financial education so that I am more aware of what I need to do for myself
Better legal protection in case I am sold the wrong product
Other
Not applicable - I already have sufficient savings
Donrsquot know
Obstacles and incentives to saving
Chart 12 Younger employees feel they donrsquot have money to invest for retirement Q What is the single biggest obstacle to you saving for retirement right now
Base 20-29 year olds
C
What is the single biggest obstacle preventing twentysomethings that they rank pressing and desirable life goals such as marriage
m saving for retirement Not having enough money to invest starting a family vacations and other leisure activities above the
top of the list cited by over a third (37) although this figure need to plan for retirement This suggests the savings gap is
ops to just 6 in the emerging market of China where mean preference-driven
omes are the lowest by far ($18000) suggesting that lack of
sh may be partly a state of mind Young employees in China The biggest obstacle to retirement savings cited by one-eighth
actually more worried about local concerns such as economic (13) of respondents is either not knowing how to invest for the
certainty (29) and currency instability (15) Behavioral long-term or the complexity of investment products charges and
ance has an impact too with the way young employees frame fees Ready solutions to this include improving young employeesrsquo
eir financial priorities creating its own obstacles to saving financial literacy about retirement planning and creating easier
many as 57 of 20-29 year olds believe that saving for access to professional financial advice
tirement is important but not a current priority suggesting
fro
is
dr
inc
ca
are
un
fin
th
As
re
19 | The Young Pragmatic and Penniless Generation
Chart 13 More money would incentivize young employees to save for retirement Q Which if any of the following would encourage you to save for retirement
Base 20-29 year olds
57 A pay rise
More generous tax breaks on long-term savings and pensions products
34
A better retirement plan pension match from my employer
33
Better and more frequent information about my retirement savings 26
Simpler investment products that I can understand with less jargon 24
Access to professional financial advice so that I have personalized recommendations on what steps I need to take 23
Access to financial education so that I am more aware of what I need to do for myself 22
Better legal protection in case I am sold the wrong product 16
Other 2
Not applicable - I already have sufficient savings 2
Donrsquot know 10
Chart 14 Very few younger employees have a written plan for retirement Q Which of the following best describes your retirement planning strategy
Base 20-29 year olds
5 Donrsquot know I have a
written plan
8
34 I have a plan but it is not
52 written down
I do not have a plan
Turning to incentives greater remuneration predictably tops a list Retirement planning of what would encourage 20-29 year olds to save for retirement Retirement planning is essential to adequate retirement saving
More tellingly a third (33) would like their employer to provide although it is somewhat lacking in todayrsquos younger employees
a better retirement plan into which both parties contribute Over half (52) have no retirement planning strategy at all
Better information and simple products would also help more and only 8 have noted down their retirement strategy
people to save A quarter (26) would be encouraged to save by
better and more frequent information about retirement savings Nevertheless the respondents polled believe that the current
while a similar number (24) want simple investment products global economy makes retirement planning increasingly
that are easy to understand As with the previous question a important ndash 71 agreed with this statement It is clear from this
lack of investment knowledge and the complexity of investment that young people between the ages of 20 and 29 do not lack
products are revealed as obstacles to savings the will to save they lack the opportunity
The Young Pragmatic and Penniless Generation | 20
Part 4 Creating the right conditions for young employees to save How may young employeesrsquo obstacles to saving be overcome For retirement readiness this will be a defining question of the early twenty-first centur y ndash and an extremely challenging one given the number of serious issues affecting younger employeesrsquo finances What was learned in the previous chapter about encouraging young employees to save is a start This chapter examines which areas and triggers to saving can be unlocked and whether government employer or individual should take most responsibility
21 | The Young Pragmatic and Penniless Generation
Friends and family
Professional financial adviser
17
24
Bank adviser 9
Personal finance websites online retirement planning tools
My employer
Government website
4
8
7
Insurance agent spokesperson
Accountant
3
3
Personal finance media 3
Lawyer
Bank website
3
2
Insurance company website
Donrsquot know
2
15
Information and advice on retirement saving strong theme revealed by our findings is that younger This finding is remarkably consistent across the countries
mployees want more information on savings products and sur veyed despite significant differences in market makeup
etter access to advice The largest share 24 (compared although some differences exist For instance a quar ter
o 17 for all employees) finds friends and family to be the (25) of young employees in France turn to bank advisers
ost important source of advice followed by professional for financial information nearly triple the number among all
dvisers (17) and bank advisers (9) That young employees young people (9)
urn to friends and family first suggests an unmet need for
rofessional financial advice This is both a challenge and an
pportunity for the financial ser vices sector
hart 15 For young employees friends and family are the leading source of retirement savings information Which of these sources (of information) is most important to you
ase 20-29 year olds
A
e
b
t
m
a
t
p
o
CQ
B
What is the role of the workplace in retirement planning Does this influence what retirement benefits younger
In response to shifting employment patterns todayrsquos younger employees expect from their workplace Certainly a majority
employees are less loyal to their employers than older workers favor workplace retirement plans with 61 believing that these
Fully 39 of 20-29 year olds are planning to look for a new job should be a fundamental part of pay (although this is lower
in the next 12 months compared to 29 of all workers and than for employees overall) and just 4 feel that retirement
31 frequently think about quitting their jobs Strikingly while planning should be left entirely to individuals
53 of all workers plan to stay with their current employer
until retirement just 37 of 20-29 year olds say this However there is evidence of a slight shift in perceptions
Younger workers are less likely to want workplace retirement
Doubtless much of this is because younger workers are more plans over other factors Of those who want employer
mobile and have more opportunities Another trigger to lower retirement plan contributions only 46 wanted this even if
employer loyalty may be the expectation of holding more jobs it reduced benefits and 35 (compared to 43 of all workers)
and even pursuing multiple careers over a working lifetime if it cut jobs
The Young Pragmatic and Penniless Generation | 22
Donrsquot know Employers should be
required to contribute to workersrsquo pensions
5 Nothing ndash it should be left to the government to take 18
care of its citizens 28
4 Nothing ndash it should be left to individual employees to
take care of themselves
13
22
Employers should provide a range of flexible benefits
and allow individuals to choose which benefits they
actually want
10 Employers should
be required to make a pension available but not
to contribute into it
Employers should not be required to provide pensions but should
provide information on how to plan for retirement
Chart 16 Most young workers feel that their employer should provide some kind of pension Q In the future what if anything should employers do to help people plan for retirement
Base 20-29 year olds
Are other workplace benefits more important Younger workers were asked to rate the importance of various workplace benefits The results reveal how highly they value the
elements of their compensation package Chart 17 shows that 87 of young employees believe a workplace retirement plan with
employer contributions would be an important factor when choosing their next job While retirement may be decades away for
twentysomethings 80 believe programs provide for a phased retirement are important
23 | The Young Pragmatic and Penniless Generation
Basic salary 94
93 Holiday entitlement
91 Overtime and bonus pay
91 Location of workplace
88 Medical health insurance
87 Opportunities for career progression
Access to a workplace retirement plan with employer contributions 87
Access to good training provision 86
Flexible working hours 85
Life insurance (death in service benefits) 81
Phased retirement or other employer programs providing for a transition into retirement 80
Ability to work past the normal retirement age 70
Access to a workplace retirement plan without employer contributions
67
Employee stock plans 65
Access to creche help with the cost of childcare 59
Opportunities for foreign travel 50
Company car 43
Chart 17 Workplace retirement plans are a relatively low priority for younger workers when choosing a job How important to you would the following workplace benefits be if you were choosing your next job
ase 20-29 year olds
Q
B
Regarding workplace benefits provided by employers today considered just enough to fulfill basic needs and in China a
young employees are about as likely as all workers to be offered fully formed nationwide retirement system is still some way off
retirement tools such as annual plan statements and online The future shape and affordability of these plans is debated in
tools from their employer though it is concerning that 24 do all of the sur vey countries to var ying degrees
not know if such tools are available or not Those provided are
considered helpful Younger workersrsquo views on reform are important because
changes to government retirement benefits are more likely
The role of government to affect them than any other part of the working population
The generosity of government retirement benefits varies The main concern cited by 57 is of facing less generous
considerably in the countries sur veyed In some countries such government retirement benefits than those enjoyed by their
as France government benefits are the primar y mechanism parentsrsquo generation
for funding retirement while in the United Kingdom they are
The Young Pragmatic and Penniless Generation | 24
The government should reduce the overall cost of state pension provision by
reducing the value of Donrsquot know individual pension plans
25 22
4 The government should not do anything State pension provision will
remain perfectly affordable in the future
28
21 The government should increase overall funding
available for the state pension through
raising taxes
The government should take a balanced approach with some reductions in individual payments and
some increases in tax
Chart 18 Young workers think that the government retirement system will need to be reformed Q With the cost of government retirement benefits becoming a greater concern as people live longer which
if any of the following do you think the government should undertake
Base 20-29 year olds
The younger generation believes that the government cannot What do young employees look for in a retirement product continue to provide as it does now ndash just 4 think government The sur vey findings show that young employees have
benefits will remain affordable to society However there is no reser vations about employer and government retirement
consensus on what governments should do to reform retirement benefits So what then do they want from a private savings
plan systems Over a fifth (22) think retirement entitlements product The savings product feature most valued by younger
should be cut just over a fifth (21) think governments should workers is protection against investment risk (Char t 19)
raise taxes and more than a quarter (28) think a mixture of This may be in the form of no loss of initial investment a
the two is the best solution Another quarter admits that they guaranteed income stream or protection against inflation
donrsquot know what should be done This is reasonable ndash the initial investment of those farthest
from retirement is most at risk However less consideration
is given to savings grow th through investment returns This
suggests that there is an oppor tunity to educate young
workers about the trade-off between returns and risk
management and what they stand to gain
25 | The Young Pragmatic and Penniless Generation
Chart 19 Products which protect against investment risk are the most important to young workers ( interested) Q Thinking about the types of financial products you could purchase to help provide you with security in retirement on a scale of 1 to 5
how interested are you in the following options
Base 20-29 year olds
A product providing a guaranteed retirement income stream or lifetime income in retirement 82
A product which protects my retirement income against inflation 81
A product which guarantees that I donrsquot lose my initial investment 81
A product which helps meet the cost of long-term care if I become unable to look after myself 80
A product which protects my capital from poor investment returns 79
A product which generates a retirement income and allows me to take a lump sum from the investment should I need to 79
A product where the annual management charges are kept low 78
A product which enables me to keep some control over how my savings are invested during my retirement 77
A product which manages the asset allocation so that I am never exposed to a level of risk Irsquom not comfortable with 76
A product which continues to provide a retirement income to my spouse in the event that I die first 75
A product which protects my family against having to pay estate taxes when I die 72
A product which locks in investment returns during the good years 70
The lsquodefined ambitionrsquo retirement system in This removes some of the disadvantages of leaving
the Netherlands a sustainable retirement solution retirement liabilities exclusively up to employers
for young workers (defined benefit) or employees (defined contribution)
In the Netherlands as elsewhere young workers are faced In the Netherlands this is likely to involve legislation which
with an increasing retirement age decreasing government lets retirement funds automatically adjust pay-outs and
suppor t for retirement and declining traditional defined retirement age as life expectancy changes xii
benefit employer retirement plans Reforms proposed
by the Dutch may show a way for ward for all mature and This model has garnered interest elsewhere In the
aging economies United Kingdom Pensions Minister Steve Webb expressed
interest on a more limited scale with a government
rsquoDefined ambitionrsquo proposes that risks are not taken on fully guarantee for a minimum rate of return for defined
by either employer or employee but are shared contribution retirement plans
The Young Pragmatic and Penniless Generation | 26
Recommendations Enabling young workers to save The studyrsquos findings reveal that the majority of young workers (66) are either saving consistently or aspire to start saving but face challenges including debt low pay and funding for significant life events and generational changes to the economic landscape and government and employer support If young people are to achieve a prosperous retirement their willingness to save should be met with better opportunities to save Here is what can be done by employers governments and young people themselves to address retirement planning concerns for younger adults
27 | The Young Pragmatic and Penniless Generation
Individuals Employers and governments
Determine how much income you need in retirement Auto-enroll employees into a workplace retirement plan Young people accept the need to save for retirement but donrsquot If an auto-enrollment workplace retirement plan is feasible
know how to act on that need They can become more retirement this can play a major role in getting young workers saving early
savvy simply by talking to friends and family (as do 24 of and regularly Combined with auto-escalation (the automatic
our respondents already) or employers going online to use annual increase in retirement plan contributions) and matching
retirement calculators or reading the personal finance media contributions it can lead to greater retirement readiness
Seek out a financial advisor Provide more flexible savings products through the workplace Young people are faced with life events that make it easy to Not all savings journeys start with a retirement plan particularly
feel overwhelmed by financial priorities in addition to retirement for young people who may think of retirement as lsquotoo far awayrsquo
planning Soliciting advice from a finance professional early in Employers can kick-start the savings habit in younger workers
life (17 of young employees have done so already) helps with by providing flexible easy to access and easy to understand
planning and priorities and making sense of long-term finances savings plans as a more attractive starter option
Start saving now and save consistently Make company retirement plans more portable As with all employees young people will strengthen their Young people move jobs much more often than previous
retirement readiness simply by saving regularly Today only 25 generations of employees so savings like DC retirement plans
of young people always save yet even small regular amounts need to follow employees when they change jobs
will improve retirement readiness over time
Make tax incentives more effective Ask your employer about workplace retirement savings plans All countries encourage long-term savings through tax relief but
and other retirement benefits young people often arenrsquot aware of this or donrsquot understand it
While one third (33) of young people believe that a workplace A more targeted system of tax relief could help provide clearer
retirement savings plan provides a major opportunity to start and simpler signals to younger people about the financial
saving employers often experience difficulties in engaging benefits of long-term saving
younger employees in discussions about retirement planning
The workplace is an important channel for achieving retirement Make better financial education central to the workplace readiness so be sure to max out on any employer contributions retirement offer
Young people who aspire to save may be prevented from
doing so by setting the wrong financial priorities Workplace
retirement education ndash alongside professional advice ndash can help
guide young people toward the right long-term priorities at an
earlier age in life
The Young Pragmatic and Penniless Generation | 28
29 | The Young Pragmatic and Penniless Generation
Glossary
Aegon Retirement Readiness Index (ARRI) c areer average retirement plan The ARRI assesses the relative levels of retirement A type of defined benefit plan that is based on an
preparedness of employees across different countries on a employeersquos average retirement earnings over the duration
scale from 1 to 10 The Index is based on three questions of plan membership Same as average salary plan
covering attitudes and three questions covering behaviors
defined ambition (DA) plan average salary plan A type of retirement plan in which retirement plan risks
A type of defined benefit plan that is based on an are shared between the employer and the employee
employeersquos average retirement earnings over the duration It offers greater certainty to savers around the final value
of plan membership Same as career average plan of their retirement assets than in DC plans and less
cost volatility for employers than with DB plans In the
a nnuity Netherlands Defined Ambition (DA) retirement plans are
A form of contract sold by life insurance companies that being introduced in order to help relieve the pressure on
guarantees a fixed or variable payment to the annuitant employers while still trying to provide employees with a
at some future time usually retirement All capital in the more secure retirement plan The United Kingdom too is
annuity grows tax-deferred looking at DA retirement plans as a solution
auto enrollment defined benefit (DB) plan An employer-sponsored retirement plan in which the An employer-sponsored retirement plan where the amount
employer is able to enroll an employee without that of future benefits an employee will receive from the plan is
employeersquos express authorization The employer determines defined typically by a formula based on salary history and
what percentage of the employeersquos salary or wages is years of service The amount of contributions the employer
contributed to the plan The employee is able to change is required to make will depend on the investment returns
this percentage and can opt out of enrollment in the plan experienced by the plan and the benefits promised
Contrast defined contribution plan
a uto-escalation A feature of a plan which automatically increases the defined contribution (DC) plan percentage of (retirement) funds saved from salary An employer-sponsored retirement plan such as a 401(k)
This feature generally uses a default or standard plan or a 403(b) plan in the United States in which
contribution escalation rate contributions are made to individual participant accounts
Depending on the type of DC plan contributions may be
B aby Boomers made by the employee the employer or both
A term used to refer to people generally born between
the end of World War II in 1945 and the mid 1960s The employeersquos benefits at retirement or termination of
Other generations Silent Generation - the generation born employment are based on the employee and employer
between 1925 and 1945 Generation X - the generation contributions and earnings and losses on those
born between 1965 and 1979 Millennials or Generation contributions See also 401(k) and 403(b) plan
Y - the generation born between 1980 and 2000 and often Contrast defined benefit plan
classified as the children of Baby Boomers
The Young Pragmatic and Penniless Generation | 30
401(k) plan An employer sponsored retirement plan that enables
employees to make tax-deferred contributions from their
salaries to the plan
403(b) plan An employer-sponsored defined contribution plan that
enables employees of universities public schools and
non-profit organizations to make tax-deferred contributions
from their salaries to the plan
final salary plan A type of defined benefit plan in which retirement
benefits are based on final retirement salary in the years
immediately before retirement benefits are received
Millennials A term used to refer to the people born from about 1980
to 2000 brought up using digital technology They are
often classified as the children of Baby Boomers
r etirement (or pension) plan Provides replacement for salary when a person is no
longer working due to retirement In the case of a defined
benefit retirement plan the employer or union contributes
to the plan which pays a predetermined benefit for the
rest of the employeersquos life based on length of service and
salary Payments may be made either directly or through
an annuity Retirement plan payments are taxable income
to recipients in the year received The employer or union
has fiduciary responsibility to invest the retirement plan
funds in stocks bonds real estate and other assets earn
a satisfactory rate of return and make payments to retired
workers Retirement plan funds holding trillions of dollars
are one of the largest investment forces in the stock
bond and real estate markets If the employer defaults in
the United States retirement plan payments are usually
guaranteed by the Pension Benefit Guaranty Corporation
(PBGC)
variable annuities (VA) An insurance contract in which the insurance company
guarantees a minimum payment at the end of the
accumulation period The payments may vary depending
on the financial performance of the managed portfolio
31 | The Young Pragmatic and Penniless Generation
About Aegon Transamerica Center for Retirement Studiesreg and Cicero Consulting
Aegon Transamerica Center Aegon is an international life insurance pensions and asset reg management company with businesses in over 20 markets for Retirement Studies in the Americas Europe and Asia Aegon companies employ The Transamerica Center for Retirement Studiesreg (TCRS) is
around 24000 people and serve millions of customers a division of the Transamerica Institute a nonprofit private
worldwide foundation TCRS is dedicated to educating the public on
wwwaegoncom emerging trends surrounding retirement security in the
United States TCRSrsquo research emphasizes employer-sponsored
In 2010 Aegon became a founding member of the Global retirement plans issues faced by small to mid-sized companies
Coalition on Aging which seeks to raise awareness of aging and their employees and the implications of legislative and
issues among policymakers and the general public A major aim regulatory changes Transamerica Institute is funded by
of the coalition is to transform the way we think and speak contributions from Transamerica Life Insurance Company and
about aging replacing the familiar rhetoric of lsquoproblemsrsquo with its affiliates and may receive funds from unaffiliated third-
a more positive discussion of lsquopossibilitiesrsquo and lsquoopportunitiesrsquo parties For more information about TCRS please refer to
wwwglobalcoalitiononagingcom wwwtransamericacenterorg
Cicero Consulting A leading consultancy firm serving the banking insurance and
asset management sector Cicero specializes in public policy
and communications consulting as well as global thought
leadership and independent market research Cicero was
established in 2001 and now operates from offices in London
Brussels Washington and Singapore As a market leader in
pensions and retirement research Cicero designed
and analyzed the research and contributed to the report
wwwcicero-groupcom
The Young Pragmatic and Penniless Generation | 32
Marta acebo Mark Green Patricia Plas
Paula alvarez douGlas henck scott roane
Frits bart wendel hoFMan thurstan robinson
Grace basile
lynette belFry
andrew berwick
Frans van der horst
tatsuo kai
herMan kaPPelle
Patti rowey
sarah russell
Joost van schaGen
robin boon Gaacutebor kePecs dick schiethart
bert-JaaP brons Marco keiM erik schouten
douG brooks
libby buet
kent callahan
JaiMe kirkPatrick
bas knol
roGer koch
anGela seyMour Jackson
kate sMith
renske stoker
Jeanne de cervens
dana chen
Peter kunkel
alexander kuiPers
eyleen sun
MartiJn tans
arkadiusz chMurzynski
heidi cho
brian lewis
Mike linder
GreG tucker
Mark twiGG
siMon clow siMon luke catherine wanG
robert colliGnon Jason Ma Marc van weede
catherine collinson GrzeGorz Mathea tiM willaert
wendy daniels
Michel denizot
edit drevenka
Paul Middleton
takaoh MiyaGawa
david Moulton
daniel wriGht
alex wynaendts
MacieJ zaPala
Jan driessen
kelly Fu
adrian Grace
Mark Mullin
Marcelle noltenius
stiG nybo
Peacuteter zatykoacute
vicky zeldin
Disclaimer This repor t contains general information only and does
not constitute a solicitation or offer No rights can be
derived from this repor t Aegon its par tners and any of
their affiliates or employees do not guarantee warrant
or represent the accuracy or completeness of the
information contained in the repor t
Acknowledgements
33 | The Young Pragmatic and Penniless Generation
References and notes i For a comparison of different retirement systems see lsquoPensions at a Glance 2011rsquo OECD 2011 ii As the survey was carried out online the survey results in China are based toward people living in urban areas iii ldquoPensions Marketsrdquo TheCityUK March 2013 p9 iv Global Employment Trends for Youth 2013 A generation at risk International Labour Organisation 2013 p2 v Eurostat July 2013 vi OECD Employment and Labour Markets Key Tables from OECD No 2 2012 vii The Federal Reserve Bank of New York 2012 Quarterly Report on Household Debt March 29 2013 viii World Bank ix lsquoWorld-class povertyrsquo The Economist February 27 2013
httpwwweconomistcomblogsanalects201302chinas-poor x lsquoThe Chinese slow down in char tsrsquo The Economist July 15 2013 xi lsquoChina rsquos welfare system difficult inflexible and blatantly unfairrsquo The Guardian April 23 2013
httpwwwtheguardiancomglobal-development2013apr23china-welfare-system-inflexible-unfair xii lsquo The Dutch experience with Defined Ambition pensions and the impact on companiesrsquo Aegon Global Pensions March 12 2013
httpwwwaegonglobalpensionscomenHomePublicationsNews-archiveNewsThe-Dutch-experience-with-Defined
Ambition-pensions-and-what-that-may-mean-for-companies-in-the-Netherlands-and-the-UK
shy
The Young Pragmatic and Penniless Generation | 34
Contact information HE ADQUARTER S
Aegon NV
PO Box 85
2501 CB The Hague
Telephone +31 70 344 32 10
w w waegoncom
MEDIA REL ATIONS
Telephone +31 70 344 89 56
Email gcc-iraegoncom
Countr y Index score
Germany 548
China 541
Canada 524
United States 519
The Netherlands 488
United Kingdom 486
Sweden 483
France 475
Hungar y 473
Poland 463
Spain 440
Japan 430
Total 489
Appendix 1 Aegon Retirement Readiness Index (ARRI) - technical note
Aegon Retirement Readiness Index (ARRI)-technical note 2013 Weightings (2012 in brackets) A sample of 12000 pre and post retirees was drawn from 1 Personal responsibilit y 20 (30)
twelve countries Of these 10800 (90) were pre-retirees 2 Level of awareness 30 (35)
and these were chosen for fur ther analysis of their plans 3 Financial capability Understanding 30 (25)
for retirement The Index that was developed forms an 4 Retirement planning 50 (50)
assessment of how well an individual perceives the adequacy 5 Financial preparedness 60 (60)
of his her own finances and financial awareness specifically 6 Income replacement 35 (35)
for addressing his retirement needs
Note that the weights devised to show the relative
The lsquotargetrsquo for the Index impor tance of each question in calculating the Index add to
The question on current savings activity was designated as the 225 These were then re-scaled so that a final scale of 1 to
target question (dependent variable) for predicting the level of 10 was calculated
preparedness for retirement Responses to this question were
then correlated with each of the six key questions (variables) Final scores by country below to understand which were driving the activity These weightings were multiplied by the actual scores for each
This was done because it was not felt to be correct to give respondent for each of the six Index questions and aggregated
each of the six variables described below an equal weight as to obtain a provisional score This was then adjusted to
they appeared to have quite different relationships to the give countr y scores out of 1 to 10 (A score of 1 to 10 had
target question sufficient differentiation to be used as the scale for analysis)
1 Personal responsibilit y for income in retirement
2 Level of awareness of need to plan for retirement
3 F inancial capability Understanding of financial matters
regarding plans for retirement
4 Retirement planning Level of development of plans
5 Financial preparedness for retirement
6 Income replacement Level of projected income replacement
The weighting To estimate the statistical significance of the decline in overall
scores in this yearrsquos Index is theoretically incalculable
Two things have changed from 2012 to 2013
1 C anada and China have joined the sample
2 The new countries have thus influenced the weights of
emphasis placed on the 6 variables used to calculate
the score hence the weights attached to the complex
calculation have changed
However it is noticeable that for countries which were sampled
in both time periods the mean scores for the six individual
variables have almost invariably declined and on average more
than half of them have shown a significant level of decline
In particular the question lsquoDo you think you will achieve this
incomersquo has for all countries shown a significant level of
decline We thus hypothesize that the comparative results
show a significant decline
The Young Pragmatic and Penniless Generation | 36
Net
herl
ands
Net
herl
ands
Net
herl
ands
Ger
man
yG
erm
any
Ger
man
yBase 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
Better off 7 4 23 Sw
eden
Swed
en11 5 7 8 3 11 14 50 5
Swed
en
About the same 19 18 27 23 8 19 18 13 29 29 24 21 U
ntie
dU
ntie
dU
nite
d Worse off 66 74 41 58 79 69 71 76 51 47 21 55
Kin
gdom
Kin
gdom
Kin
gdom
Donrsquot know 9 3 9 9 9 4 4 8 9 10 6 19
Fran
ceFr
ance
Fran
ce
Chart 2 Education of 20 ndash 29 year olds by country Q Please choose from the following list the highest level of educational or professional qualification you have
Spai
nSp
ain
Spa
in
Pol
and
Pol
and
Pol
and
Hun
gary
Hun
gary
Hun
gar y
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
dU
nite
d 100 100 100 100 100 100 100 100 100
Stat
es100 100 100
Stat
esSt
ates
Less than high school graduate 2 44 6 14 1 3 2 7 1 3 Ca
nada
Cana
daC
anad
aHigh school graduate 11 33 53 23 22 22 4 41 14 21 1 2
Some college or trade school 46 2 9 9 9 19 37 14 28 20 4 33 Ch
ina
Chin
aC
hina
College degree University degree 31 15 27 30 41 43 21 33 50 46 9 57
Postgraduate degree or 8 3 3 23 25 11 36 1 8 9 80 6 qualification Ja
pan
Japa
n Ja
pan
Other 2 4 1 1 1 2 0 5 0 6 2
None 0 1 1 0 1 0 0
NET Less than undergrad degree 61 82 70 47 34 46 43 66 42 45 11 37
NET Undergrad degree or higher 39 18 30 53 66 54 57 34 58 55 89 63
Chart 3 Aegon Retirement Readiness Index scores for young employees by country
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
NET Low Index (0-5) 80 64 79 81 85 78 81 73 65 61 61 87
NET Medium Index (6-7) 15 30 18 15 14 21 17 23 25 31 31 12
NET High Index (8-10) 4 6 3 3 1 2 2 4 10 8 7 1
Appendix 2 Country comparisons Chart 1 The majority of young employees believe that they will be worse off in retirement compared to their parents Q Do you think that future generations of retirees will be better off or worse off than those currently in retirement
37 | The Young Pragmatic and Penniless Generation
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsI always make sure that 27 34 27 26 17 14 19 22 35 33 32 20 I am saving for retirement
I only save for retirement G
erm
any
Ger
man
y21 27 20 13 17 21 16 6 17 24 20 24 occasionally from time to time
I am not saving for retirement now 6 11 8 11 5 15 9 4 10 8 9 5 although I have in the past Sw
eden
Swed
en
I am not saving for retirement 35 23 34 46 53 40 49 54 36 33 38 46 though I do intend to U
nite
dU
ntie
dK
ingd
omK
ingd
om I have never saved for retirement and 11 6 10 5 8 10 6 13 3 2 1 6 donrsquot intend to
Fran
ceFr
ance
Chart 5 Younger people are more likely not to be using any means of retirement savings Sp
ain
Spai
nQ Which financial means if any are you currently using to prepare for your retirement
Pol
and
Pol
and
only asked in Germany only asked in Spain
Hun
gary
Hun
gary
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
dSt
ates
Stat
es100 100 100 100 100 100 100 100 100 100 100 100
Defined benefit plan 16 10 25 29 15 3 76 11 20 13 5 Ca
nada
Cana
daDefined contribution plan 28 10 17 19 19 14 10 23 40 7 3
Private pension 8 18 14 10 5 9 4 13 12 40 66 4 Ch
ina
Chin
a Government pension social security 12 43 14 21 8 7 4 18 27 33 71 35
Stocks 5 12 14 7 4 17 7 2 13 10 23 9
Bonds 1 8 5 6 2 16 4 2 8 13 14 3 Ja
pan
Japa
n
Mutual funds 2 14 23 4 2 10 3 4 7 16 9 6
Investment insurances (annuities) 2 3 2 3 2 9 4 5 2 4 6 1
Savings accounts 23 37 38 25 23 6 29 15 36 37 65 36
Investment property 2 10 6 7 9 2 5 2 5 11 18 1
Employee stock purchase 1 1 1 4 1 29 0 4 1 7 1
My home 10 5 8 7 7 8 4 6 6 14 30 1
Reverse mortgage 1 4 2 4
My business 2 1 3 2 2 4 1 1 2 4 12 1
Inheritance 3 11 7 11 7 9 9 8 7 9 6 2
Annuities 1 15 2 2 1 4 3 2 1 2 8
Long-term care insurance 2 1 3 2 9 5 1 6 4 7 1
Life insurance 6 11 8 8 14 3 18 15 19 18 36 17
Unterstuumltzungskasse aus 2 Eigenmitteln finanziert
Unterstuumltzungskasse vom 2 Arbeitgeber finanziert
Chart 4 Younger employees are much more likely to aspire to save for retirement Which of the following best explains your approach to saving for retirement This can include money you contribute to any long-term
investment including pensions stocks and shares investment-linked insurances property etc
Q
The Young Pragmatic and Penniless Generation | 38
Plan de empleo mixto 2 (combinacioacuten de las dos anteriores)
Other 1 6 4 0 1 2 2 3 2 2 3 3
None nothing 8 14 12 23 25 31 6 27 21 17 3 24
Donrsquot know 29 6 17 13 19 8 4 9 7 7 0 9
hart 6 The younger generation has more negative associations of retirement Which if any of the following words do you most associate with retirement
Net
herl
ands
Net
herl
ands
Ger
man
yG
erm
any
Swed
enSw
eden
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
d100 100 100 100 100 100 100 100 100 100 100 100
Kin
gdom
Kin
gdom
Freedom 35 32 36 39 19 26 11 20 35 40 37 33
Opportunity 7 27 25 18 4 8 9 10 17 16 9 16 Fr
ance
Fran
ceLeisure 58 48 36 41 23 24 43 32 50 50 55 6
Excitement 2 5 3 8 2 6 1 2 17 17 4 3 Sp
ain
Spai
nPoverty 11 26 23 11 26 14 37 44 7 5 6 20
Insecurity 34 24 18 16 20 18 35 56 10 9 18 44 P
olan
dP
olan
dLoneliness 4 10 17 16 12 7 11 8 5 9 20 12
Ill health 2 19 7 14 15 9 49 23 6 6 29 11 H
unga
ryH
unga
ryDependent on others 11 11 5 18 14 8 18 19 14 6 11 4
Tired 3 4 8 10 14 10 17 6 7 7 13 19 U
nite
dU
nite
dFar away 38 19 25 21 61 32 2 13 33
Stat
es33 14 22
Stat
es
Boredom 14 16 6 12 16 12 15 8 12 12 16 17 Ca
nada
Cana
daEnjoyment 21 16 17 23 14 29 5 3 37 37 35 15
None of the above 0 1 1 2 0 2 1 1 2 2 1 2
Donrsquot know 2 2 3 3 2 2 1 2 0 Ch
ina
6 Ch
ina
hart 7 Many young employees think they are not on course to achieve target retirement income Ja
pan
Japa
n Do you think you will achieve this income [your estimated income needed in retirement]
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
I donrsquot know if I am on course to 56 37 57 59 50 39 49 48 48 41 22 68 achieve my retirement income
No I am on course to achieve around one-quarter (25) of my 10 14 9 13 15 14 14 13 10 10 10 7 retirement income
No I am on course to achieve around 12 20 14 11 19 19 18 15 12 11 23 12 half of my retirement income
No I am on course to achieve around three-quarters (75) of my 8 14 7 4 8 15 9 8 6 11 20 5 retirement income
Yes I am on course to achieve my 15 15 13 14 8 13 11 17 25 27 25 8 retirement income
CQ
CQ
39 | The Young Pragmatic and Penniless Generation
Chart 8 Young people in most countries expect to retire before 65 Q At what age do you expect to retire from all paid employment
Net
herl
ands
Ger
man
y
Swed
en
Uni
ted
Kin
gdom
Fran
ce
Spai
n
Pol
and
Hun
gary
Uni
ted
Stat
es
Cana
da
Chin
a
Japa
n
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
40 or under 0 1 1 0 0 1 3 1 5 12
41-50 1 2 3 5 2 2 6 3 9 4 37 9
51-59 4 4 4 6 2 4 11 5 7 10 30 1
60 5 11 8 12 10 13 19 12 12 16 21 27
61-64 2 11 10 2 20 7 4 13 5 3 1 2
65 17 22 44 31 34 32 16 26 26 32 3 25
66-69 42 32 15 9 12 29 20 13 9 9 0 1
70 19 11 10 18 10 5 10 9 13 12 0 6
71+ 5 5 5 9 4 5 5 3 7 5 1 4
Never 2 1 1 2 2 2 6 4 1 0 0
Donrsquot know 2 3 2 5 3 2 8 9 5 5 1 13
Mean 67 65 65 65 64 65 63 64 63 64 53 59
Median 67 65 65 65 65 65 65 65 65 65 55 60
Chart 9 Younger employees feel they donrsquot have money to invest for retirement Q What is the single biggest obstacle to you saving for retirement right now
Net
herl
ands
Ger
man
y
Swed
en
Uni
ted
Kin
gdom
Fran
ce
Spai
n
Pol
and
Hun
gary
Uni
ted
Stat
es
Cana
da
Chin
a
Japa
n
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
The uncertain economic environment 19 8 13 9 13 19 11 14 12 9 29 27
Lack of money to invest 28 41 33 43 47 34 48 55 47 50 6 19
Fear of poor investment returns over the coming years 2 5 10 7 5 6 8 2 6 8 14 6
Complexity of investment products 4 4 4 3 5 3 5 2 12 5
I donrsquot know how to go about investing for the long-term 2 3 10 8 5 5 3 3 6 8 7 9
The fees charged by financial services companies 2 4 4 2 4 3 4 2 3 5 2 5
I canrsquot afford to take financial advice 3 3 6 8 2 4 3 5 3 2 3 2
I donrsquot trust the financial services industry 12 11 8 6 5 10 6 2 2 3 5 4
I donrsquot see the need to save for the long-term 6 1 2 2 3 3 3 1 2 1 4 3
Concerns about unstable currencies currency fluctuations 2 5 1 3 3 3 4 3 4 5 15 2
Other (PLEASE STATE) 3 3 1 1 3 2 4 6 2 2 1
Donrsquot know 17 12 11 7 8 6 3 6 8 6 3 17
The Young Pragmatic and Penniless Generation | 40
Chart 10 More money would incentivize young employees to save for retirement Q Which if any of the following would encourage you to save for retirement
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsMore generous tax breaks on long-term savings and pensions 20 44 30 32 27 23 42 42 33 43 40 32 products
Ger
man
yG
erm
any
Access to financial education so that I am more aware of what 24 6 14 21 16 22 21 12 23 24 43 25 I need to do for myself
Swed
enSw
eden
Access to professional financial advice so that I have personalized
Uni
ted
20 24 23 23 15 21 25 9 22 23 44 13 U
nite
drecommendations on what steps
Kin
gdom
Kin
gdom
I need to take
Simpler investment products that 12 33 19 28 20 Fr
ance
18 27 16 32 28 36 10 Fr
ance
I can understand with less jargon
Better and more frequent information about my retirement 16 28 20 27 27 23
Spai
n20 18 25 31 45 22
Spai
nsavings
Better legal protection in case I am 12 18 13 18 10 24 18 13 13 19 21 6 P
olan
dP
olan
dsold the wrong product
A pay rise 46 54 44 64 55 50 70 72 67 64 53 37
A better retirement plan pension H
unga
ryH
unga
ry27 32 25 33 29 26 42 35 39 44 33 32 match from my employer
Other 4 2 1 1 2 2 3 3 2 U
nite
d3 0
Uni
ted
Stat
esSt
ates
Donrsquot know 17 9 16 10 10 12 3 8 8 5 3 17
Not applicable - I already have 3 3 4 2 2 1 1 1 2 2 3 sufficient savings Ca
nada
Cana
da
Chin
aCh
ina
Chart 11 A majority of younger employees do not have a written plan for retirement Q Which of the following best describes your retirement planning strategy
Japa
n Ja
pan
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
I have a written plan 7 18 10 9 6 8 6 5 13 10 8 4
I have a plan but it is not written 24 47 37 25 23 31 29 31 37 44 55 24
down
I do not have a plan 61 32 51 61 62 55 62 58 45 42 34 61
Donrsquot know 7 3 3 5 8 6 3 6 4 4 3 12
41 | The Young Pragmatic and Penniless Generation
Chart 12 For young employees friends and family are the leading source of retirement savings information Q And which of these sources (of information) is most important to you
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
Bank adviser 6 11 19 5 25 5 7 4 3 17 10 2 N
ethe
rlan
dsN
ethe
rlan
dsProfessional financial adviser 12 22 10 12 10 19 19 22 21 25 19 10
Insurance agent spokesperson 3 10 2 3 1 3 6 2 3 0 3 2 G
erm
any
Ger
man
yInsurance company website 3 1 3 2 4 4 2 2 1 3 1
Personal finance websites online 8 5 7 8 5 4 10 8 12 6 10 8 retirement planning tools Sw
eden
Swed
enPersonal finance media 2 2 2 2 2 6 3 1 2 1 6 2
Government website 7 1 3 6 U
nite
d5 2 3 3 2 3 7 1
Uni
ted
Kin
gdom
Kin
gdom
Bank website 2 3 3 2 1 0 3 2 1 6 3 3
My employer 12 8 4 9 4 7 5 12 8 5 4 1 Fr
ance
Fran
ceAccountant 2 6 4 4 1 3 1 3 5 5 1 3
Lawyer 2 3 1 2 2 8 4 2 1 2 2 0 Sp
ain
Spai
nFriends and family 21 22 30 28 24 26 18 24 26 20 25 24
None of these P
olan
dP
olan
dNot applicable 21 7 16 18 19 13 17 15 14 9 5 41
Hun
gary
Hun
gary
Chart 13 Most young workers feel their employer should provide some kind of pension Q In the future what if anything should employers do to help people plan for retirement
Uni
ted
Uni
ted
Stat
esSt
ates
Cana
daCa
nada
Chin
aCh
ina
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 Ja
pan
Japa
n Employers should be required to 24 43 20 40 21 26 20 28 37 34 20 30 contribute to workersrsquo pensions
Employers should be required to make a pension available but not to 12 13 7 17 20 15 15 4 11 14 22 5 contribute into it
Employers should not be required to provide pensions but should 15 9 12 8 9 8 11 6 11 9 9 11 provide information on how to plan for retirement
Employers should provide a range of flexible benefits and 13 18 18 16 15 27 25 28 21 22 45 12 allow individuals to choose which benefits they actually want
Nothing ndash it should be left to individual employees to take care 2 2 5 1 4 3 3 5 6 5 1 9 of themselves
Nothing ndash it should be left to the government to take care of its 2 5 5 2 5 8 15 14 1 4 0 4 citizens
Donrsquot know 30 10 32 17 27 12 12 15 13 13 3 29
The Young Pragmatic and Penniless Generation | 42
Chart 14 Workplace pensions are relatively low down in young workersrsquo priorities when choosing a job Q How important to you would the following workplace benefits be if you were choosing your next job
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsBasic salary 86 93 88 91 88 92 90 94 90 93 96 94
Holiday entitlement 87 94 89 91 92 94 91 94 93 94 96 91 G
erm
any
Ger
man
yOvertime and bonus pay 86 93 87 88 89 90 89 94 90 91 97 90
Location of workplace 88 91 86 92 89 90 89 92 93 93 92 86 Sw
eden
Swed
enMedical health insurance 73 92 84 65 86 87 88 87 93 94 98 83
Opportunities for career progression 86 91 81 90 90 94 91 94 92 91 96 81 U
nite
dU
nite
dAccess to a workplace retirement 85 85 81 82
Kin
gdom
78 84 80 78 84 86 93 74 K
ingd
omplan with employer contributions
Access to good training provision 85 87 85 88 86 91 85 93 86 90 95 74 Fr
ance
Fran
ceFlexible working hours 79 87 58 86 81 89 81 87 91 91 92 57
Life insurance 72 75 79 69 80 82 Sp
ain
84 80 81 88 93 74 Sp
ain
(death in service benefits)
Phased retirement or other employer programs providing for 74 54 75 71 72 81 76 74 76 81 91 65
Pol
and
Pol
and
a transition into retirement
Ability to work past the normal 68 57 64 65 64 74 72 65 74 76 80 70 retirement age H
unga
ryH
unga
ry
Access to a workplace retirement 62 74 61 68 59 77 61 47 68 74 89 65 plan without employer contributions U
nite
dU
nite
dSt
ates
Stat
esEmployee share plans 50 72 54 65 59 73 61 51 64 73 91 55
Access to creche help with the 67 75 64 56 69 79 75 83 58 69 89 68 cost of childcare Ca
nada
Cana
da
Opportunities for foreign travel 53 54 60 55 50 71 58 66 57 61 79 37
Company car 51 46 45 47 49 63 51 49 36 49 69 Ch
ina
39 Ch
ina
Japa
n Ja
pan
Chart 15 Young workers think the state pension will need to be reformed Q With the cost of government pensions becoming a greater concern as people live longer which if any of the following do you think
the government should undertake
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
The government should reduce the overall cost of state pension 15 33 16 15 16 20 28 22 21 26 30 16 provision by reducing the value of individual pension plans
The government should increase overall funding available for the 12 21 30 22 14 34 19 26 21 18 29 10 state pension through raising taxes
43 | The Young Pragmatic and Penniless Generation
he government should take a alanced approach with some 27 26 12 30 28 23 24 16 34 31 38 41 eductions in individual payments nd some increases in tax
he government should not do nything State pension provision 7 2 12 5 3 4 3 3 5 4 0 5 ill remain perfectly affordable in he future
onrsquot know 38 19 29 29 39 20 26 34 19 21 4 28
Net
herl
ands
art 16 Products which protect against investment risk are the most important to young workers ( interested) Thinking about the types of financial products you could purchase to help provide you with security in retirement on a scale of 1 to 5
how interested are you in the following options G
erm
any
Swed
en
Uni
ted
Kin
gdom
ase 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 Fr
ance
100 100 100 100 100 100 100 100 100 100 100 100
product providing a guaranteed etirement income stream or 75 81 73 76 74 83 78 76 87 85 94 69
Spai
nifetime income in retirement
product which protects my 74 79 73 76 72 82 77 74 84 86 94 65 etirement income against inflation P
olan
d
product which guarantees that I 72 82 73 78 75 81 76 73 86 86 90 67 onrsquot lose my initial investment H
unga
ry product which helps meet the ost of long-term care if I become 74 79 74 77 70 79 76 71 86 85 84 66
Uni
ted
nable to look after myself St
ates
product which protects my capital 71 81 71 76 68 76 77 73 84 83 93 65 rom poor investment returns Ca
nada
product which generates a etirement income and allows 69 78 71 75 68 81 77 72 84 86 94 70 e to take a lump sum from the
Chin
anvestment should I need to
product where the annual 66 78 68 75 72 79 77 70 85 86 87 64 anagement charges are kept low Ja
pan
product which enables me to eep some control over how my 71 73 70 75 72 80 75 69 88 85 91 63 avings are invested during my etirement
product which manages the sset allocation so that I am never 68 70 67 73 66 76 71 67 80 83 95 60 xposed to a level of risk Irsquom not omfortable with
product which continues to rovide a retirement income to my 74 78 71 75 73 81 79 73 86 82 94 60 pouse in the event that I die first
product which protects my family gainst having to pay estate taxes 73 76 71 74 75 81 75 69 82 82 89 56 hen I die
product which locks in investment 72 71 63 73 64 71 59 56 81 84 89 61 eturns during the good years
Tbra
Tawt
D
ChQ
B
Arl
Ar
Ad
Acu
Af
Armi
Am
Aksr
Aaec
Aps
Aaw
Ar
The Young Pragmatic and Penniless Generation | 44
Part 1 Young people at risk in an uncertain world As societies enjoy the benefits of longer life expectancy people will need to work harder to secure a comfortable retirement This will mean saving more during working life and a redefinition of how to approach retirement When it comes to achieving this important life goal however some groups are more at risk This report examines one such group in detail young employees at the beginning of their working life
7 | The Young Pragmatic and Penniless Generation
Countr y Median Income
lsquo(nearest 000) Married Undergrad degree or more Dependent children (any)
All 20-29 year olds $27500 25 53 25
Netherlands $37000 17 39 20
Germany $38000 33 18 27
Sweden $39000 16 30 32
United Kingdom $48000 24 53 24
France $28000 23 66 26
Spain $23000 13 54 25
Poland $13000 38 57 28
Hungary $6000 31 34 16
United States $43000 26 58 27
Canada $51000 36 55 27
China $18000 31 89 30
Japan $37000 12 63 11
Who are younger employees are also more likely than average to be single and much less
This report defines younger employees as people between likely to have children A quarter are married compared to an
20 and 29 years of age a group that belongs to the Millennials average of 64 for the generation now in their 50s
generation born between 1980 and 2000 This group differs
widely among countries although there are clear trends Education levels vary across the countries included in this research
Many have been in the labor market just a few years after a long due to differences in higher education systems (Chart 1) Overall
period of higher education Unsurprisingly median household those aged 20-29 were more likely than the average respondent
incomes are lower around $27500 according to this research to have at least an undergraduate degree The increasing
compared to an overall median of $46000 Twentysomethings prevalence of education has both positive and negative impacts
Chart 1 A portrait of younger employees Q Which of the following reflects your annual household income before taxes
Q What is your marital status
Q Please choose from the following list the highest level of educational or professional qualification you have
Q How many children do you have who are financially dependent on you Please include all children and stepchildren
Why are young people at risk Such changes will not be achieved easily in the current climate
Todayrsquos young people face a challenging set of circumstances The global financial crisis of 2007-8 not only created a need
An aging society means fewer employees supporting more for long-term structural retirement reforms it also led to the
retirees which is profoundly affecting how societies fund more immediate menace of historically high levels of youth
retirement In most of the countries surveyed lsquotraditionalrsquo unemployment The International Labour Organization (ILO)
retirement provision such as government retirement benefits estimated that in 2013 unemployment affected 73 million young
and other forms of social security or employer-sponsored people aged 15-24 worldwide representing more than 126
retirement arrangements like defined benefit company of all young people iv Across the EU 228 of people under 25
retirement plans are already subject to long-term reforms were unemployed in 2012 and in Spain the figure was 53 v
These reforms will reduce the value of future entitlements It is worth noting that the study is conducted among those who
by lowering retirement income benefits and raising the age are currently employed (part- or full-time) so the findings do not
of retirement and are likely to begin to take full effect from fully take into account the significant number of unemployed
the middle of this century just as the current generation young people
of twentysomethings enters retirement Consequently the
retirement prosperity enjoyed by todayrsquos Baby Boomers will not
be shared by subsequent retiring generations unless there is a
major change in their savings behavior
The Young Pragmatic and Penniless Generation | 8
13
4
16
3
Chart 2 Youth unemployment in 2005 and 2012 across Aegon survey countries (excluding China)
60 1
24
14
3
2005 2
06
2012
23
8
45
15
2
81
19
4
30 2
81
86
79
15 9
4
95
37
8
0 2
65
y
Japan
Spain
19
7
Canad
a
Fran
ce
Poland
Germ
any
Hunga
r
Sweden
OECD tota
l
Nether
lands
53
2
United S
tate
s
United K
ingdom
22
Note Youth unemployment rate of youth labour force (age 15 - 24) vi
23
7
12
2
21
11
3
16
2
The problems of high levels of youth unemployment and economic uncertainty affect those with jobs as well as those without
as they breed lower levels of job security and downward pressure on wages They also have a significant impact on the psychology and
confidence of younger people including those in work and their confidence in their short-term and retirement finances As the survey
findings reveal most young employees expect to find themselves worse off than their parentsrsquo generation when they enter retirement
(Chart 3)
Chart 3 The majority of young employees believe that they will be worse off in retirement compared to their parents Q Do you think that future generations of retirees will be better off or worse off than those currently in retirement
Base 20-29 year olds
Donrsquot knowBetter off
8 13
Total Respondents
2722
20 About
the same
59
Worse off
9 | The Young Pragmatic and Penniless Generation
Another major influence on the ability of young employees to save for retirement is the growth of higher education One positive
is that college graduates are more likely to benefit from lower unemployment rates fare better during economic downturns and
experience higher incomes across their lifetime supporting aspirations like home ownership vii and helping to sustain long-term
savings and increased levels of retirement preparedness (Chart 4)
Chart 4 Graduates are likely to enjoy a greater sense of retirement preparedness Q Thinking about how much you are putting aside to fund your retirement are you saving enough
Base All lsquovery prepared for retirementrsquo
30 27
17 16Postgraduate degree or qualification
College degree University degree Some college or trade school
8 High school graduate
1 Below high school graduate Other
Conversely full-time education delays entry into the labor Why is this group of young employees important arket causing a loss of several years of full-time earnings By the middle of the century todayrsquos 20-29 year olds will
otential Moreover ballooning levels of student debt may have led the world economy through an economic recovery
ignificantly delay the onset of post-graduation saving and dramatic demographic shifts during a period of greater
etween 2004 and 2012 for example student debt in the uncertainty for modern retirement systems and other issues
nited States tripled to $966 billion nationwide The effect In developing countries such as China this group will be more
f this is that todayrsquos younger employees must take greater affluent than their parents but still need to deal with the
ersonal responsibility for their savings a challenge in the consequences of a rapidly aging population and an economy
urrent economic and financial circumstances which has passed its phase of rapid growth
For all of their challenges however this group of young people
represents the biggest opportunity to change societal savings
behaviors for the better The Aegon Retirement Readiness Survey
2013 provides insights into how best to achieve this through a
greater understanding of the grouprsquos outlooks and savings habits
m
p
s
B
U
o
p
c
The Young Pragmatic and Penniless Generation | 10
45
29
20
6
50
24
21
6
56
19
21
4
46
27
21
6
Better off About the same
Worse off Donrsquot know
All work
ers
20-29 ye
ar old
s
Male 2
0-29 ye
ar old
s
Fem
ale 2
0-29 ye
ar old
s
Chinarsquos young employees bucking the gloomy trend optimistic that their economy will continue to expand over
A key finding of this yearrsquos Aegon Retirement Readiness the next 30 years Concerns about the sustainability of
Survey is that Chinese employees are far more confident growth remain however Just 37 of Chinese 20-29 year
and optimistic about their financial future than employees olds believe that the Chinese economy will improve over
in other countries This is also true of younger employees the next 12 months ndash indeed 2013 will see the economyrsquos
Of those Chinese aged 20-29 half (50) believe that they slowest expansion since 1990 x Long term Chinarsquos rapidly
will be better off in retirement than those currently in aging population makes creating a comprehensive and
retirement Younger Chinese men are the most optimistic sound retirement system an urgent priority xi Coverage has
with 56 believing that they will be better off expanded in the past 10 years with reforms such as the
introduction of the Enterprise Annuity in 2005 yet it is still
This optimism is relatively justified Since 1980 Chinese GDP not clear how China will build a universal retirement system
per capita has increased thirty-fold from $193 to $6091 across both the government-sponsored and private sectors
in 2012 viii While this dramatic increase has not benefitted However the success of reforms carried out to date suggests
all Chinese equally ndash by the Chinese governmentrsquos measure that tax incentives and efforts to improve awareness are
99 million rural Chinese live in poverty ix ndash huge progress required as part of any long term solution
has been made and young people in China are generally
Chart 5 Chinarsquos younger employees are confident of a better retirement Q Do you think that future generations of retirees will be better off or worse off than those currently in retirement
Base Respondents in China
11 | The Young Pragmatic and Penniless Generation
Part 2 The savings outlook of young employees This chapter explores the financial behaviors and savings gaps and needs of 20-29 year olds through their attitudes toward financial issues the wider economy and the savings required for a comfortable retirement
The Young Pragmatic and Penniless Generation | 12
75
21
4
69
27
4
64
31
4 5
7
36
7
20-29
30-39
40-49
50-59
44
40
16
NET Low Index (0-5)
NET Medium Index (6-7)
NET High Index (8-10)
60-69
Retirement readiness and young employees However many young employees have concerns about achieving
Retirement is seen as a major life stage by young employees this Over a third (38) are pessimistic that they will not have
They typically expect to spend an average 20 years of their lives enough to live on in retirement and 44 are pessimistic about
in retirement a definition of retirement that is consistent across being able to choose when they retire Furthermore 28 have
all working age groups Retirement conjures broadly positive made no plans at all for their retirement which may help explain
associations Fully 63 of employees in their twenties aspire some of these concerns Health worries are less of an issue with
to travel during retirement 39 see it as a period of leisure 52 being optimistic that they will enjoy good health in old age
and 30 associate it with freedom The need to plan and save although 20 believe that they will not which is perhaps related
for this phase of life is also widely accepted Half (50) of to the 17 who associate retirement with ill health in general
employees in their twenties are aware of the need to save and
64 feel a high or very high degree of personal responsibility Overall 75 of employees in their twenties achieved a low
to ensure sufficient income for retirement retirement readiness score of 0-5 on the Aegon Retirement
Readiness Index (please refer to the glossary and Appendix 1 for
an explanation of the Index) The percentage of employees with a
low score of 0-5 drops with each increase in age group and is 44
among those in the lsquoat retirementrsquo group of 60 to 69 year olds
Chart 6 Aegon Retirement Readiness Index scores for employees across age groups For more information on the ARRI see page 36
Base All aged 20 - 69
Life stage and savings attitudes Getting married and starting a family are two such events
he Retirement Readiness Index reveals that retirement Of employees in their twenties 25 are married and
reparedness is to some extent age- and life stage-related 25 have children whereas for those in their 30s 54 are
hart 6) For younger employees the idea that retirement is married and 56 have children representing a major shift
r awayrsquo combined with lower earnings and other spending toward parenthood
riorities (such as higher education or purchasing a house)
an be powerful obstacles to saving for retirement Thus while Encouragingly while young employees are less likely to
5 of all employees say that they lsquoalways make surersquo that they have started saving for retirement many see themselves as
re saving for retirement just 25 of 20-29 year olds do so future lsquoaspiringrsquo savers Fully 41 intend to save in the future
t present over half (57) of 20-29 year olds are not saving compared to 27 of all employees and only 7 do not intend
r retirement compared to 46 of all employed adults to save for retirement This large group of aspiring savers
ven in China where 44 are always saving for retirement who are committed to the idea of putting money aside for
st 32 of 20-29 year olds do so retirement challenges the view that young people are unwilling
to save Furthermore since converting these young employees
his life cycle effect can be seen in numerous ways At the from aspiring savers to regular savers may depend on the
utset of adult life employees experience lower income and right economic conditions and appropriate financial incentives
igher spending as they prioritize and fund life events with a helping them is a major opportunity for governments and
ignificant impact on their ability or desire to save for retirement employers
T
p
(C
lsquofa
p
c
3
a
A
fo
E
ju
T
o
h
s
13 | The Young Pragmatic and Penniless Generation
35 25 20 19 12 9 27 41 7 7
I always make sure I only save for I am not saving for I am not saving for I have never saved that I am saving retirement occasionally retirement now although retirement though for retirement and for retirement from time to time I have in the past I do intend to donrsquot intend to
All 20 to 29 year olds
NET Low Index (0-5)
NET Medium Index (6-7)
NET High Index (8-10)
Chart 7 Younger employees are much more likely to aspire to save for retirement but the majority are not saving Q Which of the following best explains your approach to saving for retirement This can include money you contribute to any
long-term investment including pensions stocks and shares investment-linked insurances property etc
Other findings support the assertion that younger savers This can be seen in Chart 8 More 20-29 year olds claim that
are open to increasing their retirement savings Over a third they are not likely to be saving for retirement by any means
(37) of 20-29 year olds feel lsquovery responsiblersquo for ensuring (17 against 12 for all adults) and are generally less likely
a sufficient retirement income Note however that this does to use any of the savings products mentioned Revealingly
not translate into better developed financial plans and savings 20-29 year olds are far less likely to name lsquogovernment benefits
strategies Only 7 in this age group feel they have lsquowell in retirementrsquo as a source of retirement income although almost
developedrsquo personal retirement plans and 33 say they are all respondents have some such entitlement This may be due
lsquohardly saving anythingrsquo for retirement Clearly awareness of the to unawareness of government benefits and or greater
retirement situation does not translate into actual retirement scepticism about governmentsrsquo ability or willingness to
planning activity provide for them in old age
The Young Pragmatic and Penniless Generation | 14
Chart 8 Younger people are more likely not to be using any means of retirement savings Q Which financial means if any are you currently using to prepare for your retirement
33 Savings accounts 31
36 Government pension social security 24
25 Defined benefit plan 21
22 Private pension 17
23 Defined contribution plan 15
20 Life insurance 15
14 Stocks 10
14 My home 9
12 Mutual funds 8
9 Inheritance 7
9 Bonds 7
8 Investment property 7
5 Employee stock purchase 5
5 Investment insurances (annuities) 4
4 Long-term care insurance 4
6 Annuities 3
My business 2 3
Reverse mortgage 1 1
Other 3 2
12 None nothing 17
6 Donrsquot know 10
All 20 to 29 year olds
Leisure
Freedom
Far away
Insecurity
Enjoyment
Poverty
Ill health
Boredom
Opportunity
Dependent on others
Loneliness
Tired
Excitement
None of the above
Donrsquot know
Retirement associations What does the younger generation feel about retirement and want to get out of it Perhaps unsurprisingly 20-29 year olds are more
likely to be negative than older respondents associating retirement with boredom loneliness and ill health They are also far more
likely to believe retirement is lsquofar awayrsquo which is likely to be a barrier to retirement saving
15 | The Young Pragmatic and Penniless Generation
Chart 9 The younger generation has more negative associations with retirement Q Which if any of the following words do you most associate with retirement
44 Leisure 39
36 Freedom 30
17 Far away 26
25 Insecurity 25
25 Enjoyment 21
19 Poverty 19
15 Ill health 17
9 Boredom
13
16 Opportunity
13
10 Dependent on others
12
9 Loneliness
11
0
r olds
7Tired
1
6Excitement
6
2None of the above
1
2Donrsquot know 2
All 20 to 29 yea
Aspirations and responsibilities for retirement Income levels in retirement ung people have similar retirement aspirations to the general A high proportion (47) do not know if they are on course
pulation for example travel (63) spending time with to achieve their retirement income goal Combined with the
iends and family (61) and pursuing new hobbies (52) high level of financial responsibility young employees expect
r them however retirement also includes the responsibility of to assume in retirement it is clear that people not only need
ring for others Two-fifths (40) believe that lsquoadult children to build much greater awareness of what kind of financial
retirees should help through providing financial support to pressures they are likely to face in retirement but also require
eir parents if neededrsquo and 28 believe that this will affect greater support in establishing realistic retirement income
em directly in retirement through providing financial support targets which are capable of meeting their needs
their parents A fifth (21) also expect to spend some of
eir retirement caring for other family members while just
donrsquot expect to provide for anyone compared to 40 of all
ployees Clearly todayrsquos young employees anticipate serious
ancial responsibilities in their retirement
Yo
po
fr
Fo
ca
of
th
th
to
th
30
em
fin
The Young Pragmatic and Penniless Generation | 16
Chart 10 Many young employees do not think that they are on course to achieve target retirement income Q Do you think you will achieve this income [your estimated income needed in retirement]
Base 20-29 year olds
Yes I am on course to achieve my retirement
income
16
47
12
16
10
I donrsquot know if I am on course to achieve my
retirement income
No I am on course to achieve around
one-quarter (25) of
No I am on course to achieve around half of my
retirement income
No I am on course to achieve around
three-quarters (75) of my retirement income
532
China
586
Japan
United S
tate
s
628
Poland
635
Canad
a
636
Hunga
r
638
y
Fran
ce
645 647
Spain
Sweden
649
United K
ingdom
651
Germ
any
653
Nether
lands
666
my retirement income
When will young people retire Media reports about the need to raise the age of retirement appear to have influenced younger employees Fully 44 of 20-29 year
olds do not expect to be able to choose their retirement date although the younger generation do expect to retire at a similar age
to older employees 63 This varies considerable by country In the Netherlands young employees expect to retire eight years later
than those in Japan Some countries such as China and Japan have surprisingly low expected retirement ages suggesting that young
employees may benefit from having a better understanding of when government or workplace retirement benefits kick in
Chart 11 Young people in most countries expect to retire before 65 Q At what age do you expect to retire from all paid employment
Base 20-29 year olds
Despite expecting to retire at the same age as their parents younger employees are more open to a transition into retirement
reflecting their more flexible outlook toward work Around half (51) are happy to change the way they work in some way as they move
into retirement Just 8 expect to keep working as they do currently
17 | The Young Pragmatic and Penniless Generation
Part 3 What is holding young employees back Insights into what young employees feel is holding them back from saving or saving more can be used to encourage younger people to adopt more positive savings behaviors This chapter explores the attitudes of young employees toward the financial obstacles they face and asks what actions they have taken in preparation for retirement The findings reveal that while the majority lacks adequate planning for their retirement needs financial shortcomings are only part of the stor y Spending preferences play a key role in the savings gap of advanced economies
The Young Pragmatic and Penniless Generation | 18
Lack of money to invest 37
16 The uncertain economic environment
7 Fear of poor investment returns over the coming years
6 I donrsquot trust the financial services industry
6 I donrsquot know how to go about investing for the long-term
4 oncerns about unstable currencies currency fluctuations
4 Complexity of investment products
4 I canrsquot afford to take financial advice
3 The fees charged by financial services companies
3 I donrsquot see the need to save for the long-term
Other 2
Donrsquot know 8
A pay rise
More generous tax breaks on long-term savings and pensions products
A better retirement plan pension match from my employer
Better and more frequent information about my retirement savings
Simpler investment products that I can understand with less jargon
Access to professional financial advice so that I have personalized recommendations on what steps I need to take
Access to financial education so that I am more aware of what I need to do for myself
Better legal protection in case I am sold the wrong product
Other
Not applicable - I already have sufficient savings
Donrsquot know
Obstacles and incentives to saving
Chart 12 Younger employees feel they donrsquot have money to invest for retirement Q What is the single biggest obstacle to you saving for retirement right now
Base 20-29 year olds
C
What is the single biggest obstacle preventing twentysomethings that they rank pressing and desirable life goals such as marriage
m saving for retirement Not having enough money to invest starting a family vacations and other leisure activities above the
top of the list cited by over a third (37) although this figure need to plan for retirement This suggests the savings gap is
ops to just 6 in the emerging market of China where mean preference-driven
omes are the lowest by far ($18000) suggesting that lack of
sh may be partly a state of mind Young employees in China The biggest obstacle to retirement savings cited by one-eighth
actually more worried about local concerns such as economic (13) of respondents is either not knowing how to invest for the
certainty (29) and currency instability (15) Behavioral long-term or the complexity of investment products charges and
ance has an impact too with the way young employees frame fees Ready solutions to this include improving young employeesrsquo
eir financial priorities creating its own obstacles to saving financial literacy about retirement planning and creating easier
many as 57 of 20-29 year olds believe that saving for access to professional financial advice
tirement is important but not a current priority suggesting
fro
is
dr
inc
ca
are
un
fin
th
As
re
19 | The Young Pragmatic and Penniless Generation
Chart 13 More money would incentivize young employees to save for retirement Q Which if any of the following would encourage you to save for retirement
Base 20-29 year olds
57 A pay rise
More generous tax breaks on long-term savings and pensions products
34
A better retirement plan pension match from my employer
33
Better and more frequent information about my retirement savings 26
Simpler investment products that I can understand with less jargon 24
Access to professional financial advice so that I have personalized recommendations on what steps I need to take 23
Access to financial education so that I am more aware of what I need to do for myself 22
Better legal protection in case I am sold the wrong product 16
Other 2
Not applicable - I already have sufficient savings 2
Donrsquot know 10
Chart 14 Very few younger employees have a written plan for retirement Q Which of the following best describes your retirement planning strategy
Base 20-29 year olds
5 Donrsquot know I have a
written plan
8
34 I have a plan but it is not
52 written down
I do not have a plan
Turning to incentives greater remuneration predictably tops a list Retirement planning of what would encourage 20-29 year olds to save for retirement Retirement planning is essential to adequate retirement saving
More tellingly a third (33) would like their employer to provide although it is somewhat lacking in todayrsquos younger employees
a better retirement plan into which both parties contribute Over half (52) have no retirement planning strategy at all
Better information and simple products would also help more and only 8 have noted down their retirement strategy
people to save A quarter (26) would be encouraged to save by
better and more frequent information about retirement savings Nevertheless the respondents polled believe that the current
while a similar number (24) want simple investment products global economy makes retirement planning increasingly
that are easy to understand As with the previous question a important ndash 71 agreed with this statement It is clear from this
lack of investment knowledge and the complexity of investment that young people between the ages of 20 and 29 do not lack
products are revealed as obstacles to savings the will to save they lack the opportunity
The Young Pragmatic and Penniless Generation | 20
Part 4 Creating the right conditions for young employees to save How may young employeesrsquo obstacles to saving be overcome For retirement readiness this will be a defining question of the early twenty-first centur y ndash and an extremely challenging one given the number of serious issues affecting younger employeesrsquo finances What was learned in the previous chapter about encouraging young employees to save is a start This chapter examines which areas and triggers to saving can be unlocked and whether government employer or individual should take most responsibility
21 | The Young Pragmatic and Penniless Generation
Friends and family
Professional financial adviser
17
24
Bank adviser 9
Personal finance websites online retirement planning tools
My employer
Government website
4
8
7
Insurance agent spokesperson
Accountant
3
3
Personal finance media 3
Lawyer
Bank website
3
2
Insurance company website
Donrsquot know
2
15
Information and advice on retirement saving strong theme revealed by our findings is that younger This finding is remarkably consistent across the countries
mployees want more information on savings products and sur veyed despite significant differences in market makeup
etter access to advice The largest share 24 (compared although some differences exist For instance a quar ter
o 17 for all employees) finds friends and family to be the (25) of young employees in France turn to bank advisers
ost important source of advice followed by professional for financial information nearly triple the number among all
dvisers (17) and bank advisers (9) That young employees young people (9)
urn to friends and family first suggests an unmet need for
rofessional financial advice This is both a challenge and an
pportunity for the financial ser vices sector
hart 15 For young employees friends and family are the leading source of retirement savings information Which of these sources (of information) is most important to you
ase 20-29 year olds
A
e
b
t
m
a
t
p
o
CQ
B
What is the role of the workplace in retirement planning Does this influence what retirement benefits younger
In response to shifting employment patterns todayrsquos younger employees expect from their workplace Certainly a majority
employees are less loyal to their employers than older workers favor workplace retirement plans with 61 believing that these
Fully 39 of 20-29 year olds are planning to look for a new job should be a fundamental part of pay (although this is lower
in the next 12 months compared to 29 of all workers and than for employees overall) and just 4 feel that retirement
31 frequently think about quitting their jobs Strikingly while planning should be left entirely to individuals
53 of all workers plan to stay with their current employer
until retirement just 37 of 20-29 year olds say this However there is evidence of a slight shift in perceptions
Younger workers are less likely to want workplace retirement
Doubtless much of this is because younger workers are more plans over other factors Of those who want employer
mobile and have more opportunities Another trigger to lower retirement plan contributions only 46 wanted this even if
employer loyalty may be the expectation of holding more jobs it reduced benefits and 35 (compared to 43 of all workers)
and even pursuing multiple careers over a working lifetime if it cut jobs
The Young Pragmatic and Penniless Generation | 22
Donrsquot know Employers should be
required to contribute to workersrsquo pensions
5 Nothing ndash it should be left to the government to take 18
care of its citizens 28
4 Nothing ndash it should be left to individual employees to
take care of themselves
13
22
Employers should provide a range of flexible benefits
and allow individuals to choose which benefits they
actually want
10 Employers should
be required to make a pension available but not
to contribute into it
Employers should not be required to provide pensions but should
provide information on how to plan for retirement
Chart 16 Most young workers feel that their employer should provide some kind of pension Q In the future what if anything should employers do to help people plan for retirement
Base 20-29 year olds
Are other workplace benefits more important Younger workers were asked to rate the importance of various workplace benefits The results reveal how highly they value the
elements of their compensation package Chart 17 shows that 87 of young employees believe a workplace retirement plan with
employer contributions would be an important factor when choosing their next job While retirement may be decades away for
twentysomethings 80 believe programs provide for a phased retirement are important
23 | The Young Pragmatic and Penniless Generation
Basic salary 94
93 Holiday entitlement
91 Overtime and bonus pay
91 Location of workplace
88 Medical health insurance
87 Opportunities for career progression
Access to a workplace retirement plan with employer contributions 87
Access to good training provision 86
Flexible working hours 85
Life insurance (death in service benefits) 81
Phased retirement or other employer programs providing for a transition into retirement 80
Ability to work past the normal retirement age 70
Access to a workplace retirement plan without employer contributions
67
Employee stock plans 65
Access to creche help with the cost of childcare 59
Opportunities for foreign travel 50
Company car 43
Chart 17 Workplace retirement plans are a relatively low priority for younger workers when choosing a job How important to you would the following workplace benefits be if you were choosing your next job
ase 20-29 year olds
Q
B
Regarding workplace benefits provided by employers today considered just enough to fulfill basic needs and in China a
young employees are about as likely as all workers to be offered fully formed nationwide retirement system is still some way off
retirement tools such as annual plan statements and online The future shape and affordability of these plans is debated in
tools from their employer though it is concerning that 24 do all of the sur vey countries to var ying degrees
not know if such tools are available or not Those provided are
considered helpful Younger workersrsquo views on reform are important because
changes to government retirement benefits are more likely
The role of government to affect them than any other part of the working population
The generosity of government retirement benefits varies The main concern cited by 57 is of facing less generous
considerably in the countries sur veyed In some countries such government retirement benefits than those enjoyed by their
as France government benefits are the primar y mechanism parentsrsquo generation
for funding retirement while in the United Kingdom they are
The Young Pragmatic and Penniless Generation | 24
The government should reduce the overall cost of state pension provision by
reducing the value of Donrsquot know individual pension plans
25 22
4 The government should not do anything State pension provision will
remain perfectly affordable in the future
28
21 The government should increase overall funding
available for the state pension through
raising taxes
The government should take a balanced approach with some reductions in individual payments and
some increases in tax
Chart 18 Young workers think that the government retirement system will need to be reformed Q With the cost of government retirement benefits becoming a greater concern as people live longer which
if any of the following do you think the government should undertake
Base 20-29 year olds
The younger generation believes that the government cannot What do young employees look for in a retirement product continue to provide as it does now ndash just 4 think government The sur vey findings show that young employees have
benefits will remain affordable to society However there is no reser vations about employer and government retirement
consensus on what governments should do to reform retirement benefits So what then do they want from a private savings
plan systems Over a fifth (22) think retirement entitlements product The savings product feature most valued by younger
should be cut just over a fifth (21) think governments should workers is protection against investment risk (Char t 19)
raise taxes and more than a quarter (28) think a mixture of This may be in the form of no loss of initial investment a
the two is the best solution Another quarter admits that they guaranteed income stream or protection against inflation
donrsquot know what should be done This is reasonable ndash the initial investment of those farthest
from retirement is most at risk However less consideration
is given to savings grow th through investment returns This
suggests that there is an oppor tunity to educate young
workers about the trade-off between returns and risk
management and what they stand to gain
25 | The Young Pragmatic and Penniless Generation
Chart 19 Products which protect against investment risk are the most important to young workers ( interested) Q Thinking about the types of financial products you could purchase to help provide you with security in retirement on a scale of 1 to 5
how interested are you in the following options
Base 20-29 year olds
A product providing a guaranteed retirement income stream or lifetime income in retirement 82
A product which protects my retirement income against inflation 81
A product which guarantees that I donrsquot lose my initial investment 81
A product which helps meet the cost of long-term care if I become unable to look after myself 80
A product which protects my capital from poor investment returns 79
A product which generates a retirement income and allows me to take a lump sum from the investment should I need to 79
A product where the annual management charges are kept low 78
A product which enables me to keep some control over how my savings are invested during my retirement 77
A product which manages the asset allocation so that I am never exposed to a level of risk Irsquom not comfortable with 76
A product which continues to provide a retirement income to my spouse in the event that I die first 75
A product which protects my family against having to pay estate taxes when I die 72
A product which locks in investment returns during the good years 70
The lsquodefined ambitionrsquo retirement system in This removes some of the disadvantages of leaving
the Netherlands a sustainable retirement solution retirement liabilities exclusively up to employers
for young workers (defined benefit) or employees (defined contribution)
In the Netherlands as elsewhere young workers are faced In the Netherlands this is likely to involve legislation which
with an increasing retirement age decreasing government lets retirement funds automatically adjust pay-outs and
suppor t for retirement and declining traditional defined retirement age as life expectancy changes xii
benefit employer retirement plans Reforms proposed
by the Dutch may show a way for ward for all mature and This model has garnered interest elsewhere In the
aging economies United Kingdom Pensions Minister Steve Webb expressed
interest on a more limited scale with a government
rsquoDefined ambitionrsquo proposes that risks are not taken on fully guarantee for a minimum rate of return for defined
by either employer or employee but are shared contribution retirement plans
The Young Pragmatic and Penniless Generation | 26
Recommendations Enabling young workers to save The studyrsquos findings reveal that the majority of young workers (66) are either saving consistently or aspire to start saving but face challenges including debt low pay and funding for significant life events and generational changes to the economic landscape and government and employer support If young people are to achieve a prosperous retirement their willingness to save should be met with better opportunities to save Here is what can be done by employers governments and young people themselves to address retirement planning concerns for younger adults
27 | The Young Pragmatic and Penniless Generation
Individuals Employers and governments
Determine how much income you need in retirement Auto-enroll employees into a workplace retirement plan Young people accept the need to save for retirement but donrsquot If an auto-enrollment workplace retirement plan is feasible
know how to act on that need They can become more retirement this can play a major role in getting young workers saving early
savvy simply by talking to friends and family (as do 24 of and regularly Combined with auto-escalation (the automatic
our respondents already) or employers going online to use annual increase in retirement plan contributions) and matching
retirement calculators or reading the personal finance media contributions it can lead to greater retirement readiness
Seek out a financial advisor Provide more flexible savings products through the workplace Young people are faced with life events that make it easy to Not all savings journeys start with a retirement plan particularly
feel overwhelmed by financial priorities in addition to retirement for young people who may think of retirement as lsquotoo far awayrsquo
planning Soliciting advice from a finance professional early in Employers can kick-start the savings habit in younger workers
life (17 of young employees have done so already) helps with by providing flexible easy to access and easy to understand
planning and priorities and making sense of long-term finances savings plans as a more attractive starter option
Start saving now and save consistently Make company retirement plans more portable As with all employees young people will strengthen their Young people move jobs much more often than previous
retirement readiness simply by saving regularly Today only 25 generations of employees so savings like DC retirement plans
of young people always save yet even small regular amounts need to follow employees when they change jobs
will improve retirement readiness over time
Make tax incentives more effective Ask your employer about workplace retirement savings plans All countries encourage long-term savings through tax relief but
and other retirement benefits young people often arenrsquot aware of this or donrsquot understand it
While one third (33) of young people believe that a workplace A more targeted system of tax relief could help provide clearer
retirement savings plan provides a major opportunity to start and simpler signals to younger people about the financial
saving employers often experience difficulties in engaging benefits of long-term saving
younger employees in discussions about retirement planning
The workplace is an important channel for achieving retirement Make better financial education central to the workplace readiness so be sure to max out on any employer contributions retirement offer
Young people who aspire to save may be prevented from
doing so by setting the wrong financial priorities Workplace
retirement education ndash alongside professional advice ndash can help
guide young people toward the right long-term priorities at an
earlier age in life
The Young Pragmatic and Penniless Generation | 28
29 | The Young Pragmatic and Penniless Generation
Glossary
Aegon Retirement Readiness Index (ARRI) c areer average retirement plan The ARRI assesses the relative levels of retirement A type of defined benefit plan that is based on an
preparedness of employees across different countries on a employeersquos average retirement earnings over the duration
scale from 1 to 10 The Index is based on three questions of plan membership Same as average salary plan
covering attitudes and three questions covering behaviors
defined ambition (DA) plan average salary plan A type of retirement plan in which retirement plan risks
A type of defined benefit plan that is based on an are shared between the employer and the employee
employeersquos average retirement earnings over the duration It offers greater certainty to savers around the final value
of plan membership Same as career average plan of their retirement assets than in DC plans and less
cost volatility for employers than with DB plans In the
a nnuity Netherlands Defined Ambition (DA) retirement plans are
A form of contract sold by life insurance companies that being introduced in order to help relieve the pressure on
guarantees a fixed or variable payment to the annuitant employers while still trying to provide employees with a
at some future time usually retirement All capital in the more secure retirement plan The United Kingdom too is
annuity grows tax-deferred looking at DA retirement plans as a solution
auto enrollment defined benefit (DB) plan An employer-sponsored retirement plan in which the An employer-sponsored retirement plan where the amount
employer is able to enroll an employee without that of future benefits an employee will receive from the plan is
employeersquos express authorization The employer determines defined typically by a formula based on salary history and
what percentage of the employeersquos salary or wages is years of service The amount of contributions the employer
contributed to the plan The employee is able to change is required to make will depend on the investment returns
this percentage and can opt out of enrollment in the plan experienced by the plan and the benefits promised
Contrast defined contribution plan
a uto-escalation A feature of a plan which automatically increases the defined contribution (DC) plan percentage of (retirement) funds saved from salary An employer-sponsored retirement plan such as a 401(k)
This feature generally uses a default or standard plan or a 403(b) plan in the United States in which
contribution escalation rate contributions are made to individual participant accounts
Depending on the type of DC plan contributions may be
B aby Boomers made by the employee the employer or both
A term used to refer to people generally born between
the end of World War II in 1945 and the mid 1960s The employeersquos benefits at retirement or termination of
Other generations Silent Generation - the generation born employment are based on the employee and employer
between 1925 and 1945 Generation X - the generation contributions and earnings and losses on those
born between 1965 and 1979 Millennials or Generation contributions See also 401(k) and 403(b) plan
Y - the generation born between 1980 and 2000 and often Contrast defined benefit plan
classified as the children of Baby Boomers
The Young Pragmatic and Penniless Generation | 30
401(k) plan An employer sponsored retirement plan that enables
employees to make tax-deferred contributions from their
salaries to the plan
403(b) plan An employer-sponsored defined contribution plan that
enables employees of universities public schools and
non-profit organizations to make tax-deferred contributions
from their salaries to the plan
final salary plan A type of defined benefit plan in which retirement
benefits are based on final retirement salary in the years
immediately before retirement benefits are received
Millennials A term used to refer to the people born from about 1980
to 2000 brought up using digital technology They are
often classified as the children of Baby Boomers
r etirement (or pension) plan Provides replacement for salary when a person is no
longer working due to retirement In the case of a defined
benefit retirement plan the employer or union contributes
to the plan which pays a predetermined benefit for the
rest of the employeersquos life based on length of service and
salary Payments may be made either directly or through
an annuity Retirement plan payments are taxable income
to recipients in the year received The employer or union
has fiduciary responsibility to invest the retirement plan
funds in stocks bonds real estate and other assets earn
a satisfactory rate of return and make payments to retired
workers Retirement plan funds holding trillions of dollars
are one of the largest investment forces in the stock
bond and real estate markets If the employer defaults in
the United States retirement plan payments are usually
guaranteed by the Pension Benefit Guaranty Corporation
(PBGC)
variable annuities (VA) An insurance contract in which the insurance company
guarantees a minimum payment at the end of the
accumulation period The payments may vary depending
on the financial performance of the managed portfolio
31 | The Young Pragmatic and Penniless Generation
About Aegon Transamerica Center for Retirement Studiesreg and Cicero Consulting
Aegon Transamerica Center Aegon is an international life insurance pensions and asset reg management company with businesses in over 20 markets for Retirement Studies in the Americas Europe and Asia Aegon companies employ The Transamerica Center for Retirement Studiesreg (TCRS) is
around 24000 people and serve millions of customers a division of the Transamerica Institute a nonprofit private
worldwide foundation TCRS is dedicated to educating the public on
wwwaegoncom emerging trends surrounding retirement security in the
United States TCRSrsquo research emphasizes employer-sponsored
In 2010 Aegon became a founding member of the Global retirement plans issues faced by small to mid-sized companies
Coalition on Aging which seeks to raise awareness of aging and their employees and the implications of legislative and
issues among policymakers and the general public A major aim regulatory changes Transamerica Institute is funded by
of the coalition is to transform the way we think and speak contributions from Transamerica Life Insurance Company and
about aging replacing the familiar rhetoric of lsquoproblemsrsquo with its affiliates and may receive funds from unaffiliated third-
a more positive discussion of lsquopossibilitiesrsquo and lsquoopportunitiesrsquo parties For more information about TCRS please refer to
wwwglobalcoalitiononagingcom wwwtransamericacenterorg
Cicero Consulting A leading consultancy firm serving the banking insurance and
asset management sector Cicero specializes in public policy
and communications consulting as well as global thought
leadership and independent market research Cicero was
established in 2001 and now operates from offices in London
Brussels Washington and Singapore As a market leader in
pensions and retirement research Cicero designed
and analyzed the research and contributed to the report
wwwcicero-groupcom
The Young Pragmatic and Penniless Generation | 32
Marta acebo Mark Green Patricia Plas
Paula alvarez douGlas henck scott roane
Frits bart wendel hoFMan thurstan robinson
Grace basile
lynette belFry
andrew berwick
Frans van der horst
tatsuo kai
herMan kaPPelle
Patti rowey
sarah russell
Joost van schaGen
robin boon Gaacutebor kePecs dick schiethart
bert-JaaP brons Marco keiM erik schouten
douG brooks
libby buet
kent callahan
JaiMe kirkPatrick
bas knol
roGer koch
anGela seyMour Jackson
kate sMith
renske stoker
Jeanne de cervens
dana chen
Peter kunkel
alexander kuiPers
eyleen sun
MartiJn tans
arkadiusz chMurzynski
heidi cho
brian lewis
Mike linder
GreG tucker
Mark twiGG
siMon clow siMon luke catherine wanG
robert colliGnon Jason Ma Marc van weede
catherine collinson GrzeGorz Mathea tiM willaert
wendy daniels
Michel denizot
edit drevenka
Paul Middleton
takaoh MiyaGawa
david Moulton
daniel wriGht
alex wynaendts
MacieJ zaPala
Jan driessen
kelly Fu
adrian Grace
Mark Mullin
Marcelle noltenius
stiG nybo
Peacuteter zatykoacute
vicky zeldin
Disclaimer This repor t contains general information only and does
not constitute a solicitation or offer No rights can be
derived from this repor t Aegon its par tners and any of
their affiliates or employees do not guarantee warrant
or represent the accuracy or completeness of the
information contained in the repor t
Acknowledgements
33 | The Young Pragmatic and Penniless Generation
References and notes i For a comparison of different retirement systems see lsquoPensions at a Glance 2011rsquo OECD 2011 ii As the survey was carried out online the survey results in China are based toward people living in urban areas iii ldquoPensions Marketsrdquo TheCityUK March 2013 p9 iv Global Employment Trends for Youth 2013 A generation at risk International Labour Organisation 2013 p2 v Eurostat July 2013 vi OECD Employment and Labour Markets Key Tables from OECD No 2 2012 vii The Federal Reserve Bank of New York 2012 Quarterly Report on Household Debt March 29 2013 viii World Bank ix lsquoWorld-class povertyrsquo The Economist February 27 2013
httpwwweconomistcomblogsanalects201302chinas-poor x lsquoThe Chinese slow down in char tsrsquo The Economist July 15 2013 xi lsquoChina rsquos welfare system difficult inflexible and blatantly unfairrsquo The Guardian April 23 2013
httpwwwtheguardiancomglobal-development2013apr23china-welfare-system-inflexible-unfair xii lsquo The Dutch experience with Defined Ambition pensions and the impact on companiesrsquo Aegon Global Pensions March 12 2013
httpwwwaegonglobalpensionscomenHomePublicationsNews-archiveNewsThe-Dutch-experience-with-Defined
Ambition-pensions-and-what-that-may-mean-for-companies-in-the-Netherlands-and-the-UK
shy
The Young Pragmatic and Penniless Generation | 34
Contact information HE ADQUARTER S
Aegon NV
PO Box 85
2501 CB The Hague
Telephone +31 70 344 32 10
w w waegoncom
MEDIA REL ATIONS
Telephone +31 70 344 89 56
Email gcc-iraegoncom
Countr y Index score
Germany 548
China 541
Canada 524
United States 519
The Netherlands 488
United Kingdom 486
Sweden 483
France 475
Hungar y 473
Poland 463
Spain 440
Japan 430
Total 489
Appendix 1 Aegon Retirement Readiness Index (ARRI) - technical note
Aegon Retirement Readiness Index (ARRI)-technical note 2013 Weightings (2012 in brackets) A sample of 12000 pre and post retirees was drawn from 1 Personal responsibilit y 20 (30)
twelve countries Of these 10800 (90) were pre-retirees 2 Level of awareness 30 (35)
and these were chosen for fur ther analysis of their plans 3 Financial capability Understanding 30 (25)
for retirement The Index that was developed forms an 4 Retirement planning 50 (50)
assessment of how well an individual perceives the adequacy 5 Financial preparedness 60 (60)
of his her own finances and financial awareness specifically 6 Income replacement 35 (35)
for addressing his retirement needs
Note that the weights devised to show the relative
The lsquotargetrsquo for the Index impor tance of each question in calculating the Index add to
The question on current savings activity was designated as the 225 These were then re-scaled so that a final scale of 1 to
target question (dependent variable) for predicting the level of 10 was calculated
preparedness for retirement Responses to this question were
then correlated with each of the six key questions (variables) Final scores by country below to understand which were driving the activity These weightings were multiplied by the actual scores for each
This was done because it was not felt to be correct to give respondent for each of the six Index questions and aggregated
each of the six variables described below an equal weight as to obtain a provisional score This was then adjusted to
they appeared to have quite different relationships to the give countr y scores out of 1 to 10 (A score of 1 to 10 had
target question sufficient differentiation to be used as the scale for analysis)
1 Personal responsibilit y for income in retirement
2 Level of awareness of need to plan for retirement
3 F inancial capability Understanding of financial matters
regarding plans for retirement
4 Retirement planning Level of development of plans
5 Financial preparedness for retirement
6 Income replacement Level of projected income replacement
The weighting To estimate the statistical significance of the decline in overall
scores in this yearrsquos Index is theoretically incalculable
Two things have changed from 2012 to 2013
1 C anada and China have joined the sample
2 The new countries have thus influenced the weights of
emphasis placed on the 6 variables used to calculate
the score hence the weights attached to the complex
calculation have changed
However it is noticeable that for countries which were sampled
in both time periods the mean scores for the six individual
variables have almost invariably declined and on average more
than half of them have shown a significant level of decline
In particular the question lsquoDo you think you will achieve this
incomersquo has for all countries shown a significant level of
decline We thus hypothesize that the comparative results
show a significant decline
The Young Pragmatic and Penniless Generation | 36
Net
herl
ands
Net
herl
ands
Net
herl
ands
Ger
man
yG
erm
any
Ger
man
yBase 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
Better off 7 4 23 Sw
eden
Swed
en11 5 7 8 3 11 14 50 5
Swed
en
About the same 19 18 27 23 8 19 18 13 29 29 24 21 U
ntie
dU
ntie
dU
nite
d Worse off 66 74 41 58 79 69 71 76 51 47 21 55
Kin
gdom
Kin
gdom
Kin
gdom
Donrsquot know 9 3 9 9 9 4 4 8 9 10 6 19
Fran
ceFr
ance
Fran
ce
Chart 2 Education of 20 ndash 29 year olds by country Q Please choose from the following list the highest level of educational or professional qualification you have
Spai
nSp
ain
Spa
in
Pol
and
Pol
and
Pol
and
Hun
gary
Hun
gary
Hun
gar y
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
dU
nite
d 100 100 100 100 100 100 100 100 100
Stat
es100 100 100
Stat
esSt
ates
Less than high school graduate 2 44 6 14 1 3 2 7 1 3 Ca
nada
Cana
daC
anad
aHigh school graduate 11 33 53 23 22 22 4 41 14 21 1 2
Some college or trade school 46 2 9 9 9 19 37 14 28 20 4 33 Ch
ina
Chin
aC
hina
College degree University degree 31 15 27 30 41 43 21 33 50 46 9 57
Postgraduate degree or 8 3 3 23 25 11 36 1 8 9 80 6 qualification Ja
pan
Japa
n Ja
pan
Other 2 4 1 1 1 2 0 5 0 6 2
None 0 1 1 0 1 0 0
NET Less than undergrad degree 61 82 70 47 34 46 43 66 42 45 11 37
NET Undergrad degree or higher 39 18 30 53 66 54 57 34 58 55 89 63
Chart 3 Aegon Retirement Readiness Index scores for young employees by country
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
NET Low Index (0-5) 80 64 79 81 85 78 81 73 65 61 61 87
NET Medium Index (6-7) 15 30 18 15 14 21 17 23 25 31 31 12
NET High Index (8-10) 4 6 3 3 1 2 2 4 10 8 7 1
Appendix 2 Country comparisons Chart 1 The majority of young employees believe that they will be worse off in retirement compared to their parents Q Do you think that future generations of retirees will be better off or worse off than those currently in retirement
37 | The Young Pragmatic and Penniless Generation
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsI always make sure that 27 34 27 26 17 14 19 22 35 33 32 20 I am saving for retirement
I only save for retirement G
erm
any
Ger
man
y21 27 20 13 17 21 16 6 17 24 20 24 occasionally from time to time
I am not saving for retirement now 6 11 8 11 5 15 9 4 10 8 9 5 although I have in the past Sw
eden
Swed
en
I am not saving for retirement 35 23 34 46 53 40 49 54 36 33 38 46 though I do intend to U
nite
dU
ntie
dK
ingd
omK
ingd
om I have never saved for retirement and 11 6 10 5 8 10 6 13 3 2 1 6 donrsquot intend to
Fran
ceFr
ance
Chart 5 Younger people are more likely not to be using any means of retirement savings Sp
ain
Spai
nQ Which financial means if any are you currently using to prepare for your retirement
Pol
and
Pol
and
only asked in Germany only asked in Spain
Hun
gary
Hun
gary
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
dSt
ates
Stat
es100 100 100 100 100 100 100 100 100 100 100 100
Defined benefit plan 16 10 25 29 15 3 76 11 20 13 5 Ca
nada
Cana
daDefined contribution plan 28 10 17 19 19 14 10 23 40 7 3
Private pension 8 18 14 10 5 9 4 13 12 40 66 4 Ch
ina
Chin
a Government pension social security 12 43 14 21 8 7 4 18 27 33 71 35
Stocks 5 12 14 7 4 17 7 2 13 10 23 9
Bonds 1 8 5 6 2 16 4 2 8 13 14 3 Ja
pan
Japa
n
Mutual funds 2 14 23 4 2 10 3 4 7 16 9 6
Investment insurances (annuities) 2 3 2 3 2 9 4 5 2 4 6 1
Savings accounts 23 37 38 25 23 6 29 15 36 37 65 36
Investment property 2 10 6 7 9 2 5 2 5 11 18 1
Employee stock purchase 1 1 1 4 1 29 0 4 1 7 1
My home 10 5 8 7 7 8 4 6 6 14 30 1
Reverse mortgage 1 4 2 4
My business 2 1 3 2 2 4 1 1 2 4 12 1
Inheritance 3 11 7 11 7 9 9 8 7 9 6 2
Annuities 1 15 2 2 1 4 3 2 1 2 8
Long-term care insurance 2 1 3 2 9 5 1 6 4 7 1
Life insurance 6 11 8 8 14 3 18 15 19 18 36 17
Unterstuumltzungskasse aus 2 Eigenmitteln finanziert
Unterstuumltzungskasse vom 2 Arbeitgeber finanziert
Chart 4 Younger employees are much more likely to aspire to save for retirement Which of the following best explains your approach to saving for retirement This can include money you contribute to any long-term
investment including pensions stocks and shares investment-linked insurances property etc
Q
The Young Pragmatic and Penniless Generation | 38
Plan de empleo mixto 2 (combinacioacuten de las dos anteriores)
Other 1 6 4 0 1 2 2 3 2 2 3 3
None nothing 8 14 12 23 25 31 6 27 21 17 3 24
Donrsquot know 29 6 17 13 19 8 4 9 7 7 0 9
hart 6 The younger generation has more negative associations of retirement Which if any of the following words do you most associate with retirement
Net
herl
ands
Net
herl
ands
Ger
man
yG
erm
any
Swed
enSw
eden
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
d100 100 100 100 100 100 100 100 100 100 100 100
Kin
gdom
Kin
gdom
Freedom 35 32 36 39 19 26 11 20 35 40 37 33
Opportunity 7 27 25 18 4 8 9 10 17 16 9 16 Fr
ance
Fran
ceLeisure 58 48 36 41 23 24 43 32 50 50 55 6
Excitement 2 5 3 8 2 6 1 2 17 17 4 3 Sp
ain
Spai
nPoverty 11 26 23 11 26 14 37 44 7 5 6 20
Insecurity 34 24 18 16 20 18 35 56 10 9 18 44 P
olan
dP
olan
dLoneliness 4 10 17 16 12 7 11 8 5 9 20 12
Ill health 2 19 7 14 15 9 49 23 6 6 29 11 H
unga
ryH
unga
ryDependent on others 11 11 5 18 14 8 18 19 14 6 11 4
Tired 3 4 8 10 14 10 17 6 7 7 13 19 U
nite
dU
nite
dFar away 38 19 25 21 61 32 2 13 33
Stat
es33 14 22
Stat
es
Boredom 14 16 6 12 16 12 15 8 12 12 16 17 Ca
nada
Cana
daEnjoyment 21 16 17 23 14 29 5 3 37 37 35 15
None of the above 0 1 1 2 0 2 1 1 2 2 1 2
Donrsquot know 2 2 3 3 2 2 1 2 0 Ch
ina
6 Ch
ina
hart 7 Many young employees think they are not on course to achieve target retirement income Ja
pan
Japa
n Do you think you will achieve this income [your estimated income needed in retirement]
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
I donrsquot know if I am on course to 56 37 57 59 50 39 49 48 48 41 22 68 achieve my retirement income
No I am on course to achieve around one-quarter (25) of my 10 14 9 13 15 14 14 13 10 10 10 7 retirement income
No I am on course to achieve around 12 20 14 11 19 19 18 15 12 11 23 12 half of my retirement income
No I am on course to achieve around three-quarters (75) of my 8 14 7 4 8 15 9 8 6 11 20 5 retirement income
Yes I am on course to achieve my 15 15 13 14 8 13 11 17 25 27 25 8 retirement income
CQ
CQ
39 | The Young Pragmatic and Penniless Generation
Chart 8 Young people in most countries expect to retire before 65 Q At what age do you expect to retire from all paid employment
Net
herl
ands
Ger
man
y
Swed
en
Uni
ted
Kin
gdom
Fran
ce
Spai
n
Pol
and
Hun
gary
Uni
ted
Stat
es
Cana
da
Chin
a
Japa
n
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
40 or under 0 1 1 0 0 1 3 1 5 12
41-50 1 2 3 5 2 2 6 3 9 4 37 9
51-59 4 4 4 6 2 4 11 5 7 10 30 1
60 5 11 8 12 10 13 19 12 12 16 21 27
61-64 2 11 10 2 20 7 4 13 5 3 1 2
65 17 22 44 31 34 32 16 26 26 32 3 25
66-69 42 32 15 9 12 29 20 13 9 9 0 1
70 19 11 10 18 10 5 10 9 13 12 0 6
71+ 5 5 5 9 4 5 5 3 7 5 1 4
Never 2 1 1 2 2 2 6 4 1 0 0
Donrsquot know 2 3 2 5 3 2 8 9 5 5 1 13
Mean 67 65 65 65 64 65 63 64 63 64 53 59
Median 67 65 65 65 65 65 65 65 65 65 55 60
Chart 9 Younger employees feel they donrsquot have money to invest for retirement Q What is the single biggest obstacle to you saving for retirement right now
Net
herl
ands
Ger
man
y
Swed
en
Uni
ted
Kin
gdom
Fran
ce
Spai
n
Pol
and
Hun
gary
Uni
ted
Stat
es
Cana
da
Chin
a
Japa
n
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
The uncertain economic environment 19 8 13 9 13 19 11 14 12 9 29 27
Lack of money to invest 28 41 33 43 47 34 48 55 47 50 6 19
Fear of poor investment returns over the coming years 2 5 10 7 5 6 8 2 6 8 14 6
Complexity of investment products 4 4 4 3 5 3 5 2 12 5
I donrsquot know how to go about investing for the long-term 2 3 10 8 5 5 3 3 6 8 7 9
The fees charged by financial services companies 2 4 4 2 4 3 4 2 3 5 2 5
I canrsquot afford to take financial advice 3 3 6 8 2 4 3 5 3 2 3 2
I donrsquot trust the financial services industry 12 11 8 6 5 10 6 2 2 3 5 4
I donrsquot see the need to save for the long-term 6 1 2 2 3 3 3 1 2 1 4 3
Concerns about unstable currencies currency fluctuations 2 5 1 3 3 3 4 3 4 5 15 2
Other (PLEASE STATE) 3 3 1 1 3 2 4 6 2 2 1
Donrsquot know 17 12 11 7 8 6 3 6 8 6 3 17
The Young Pragmatic and Penniless Generation | 40
Chart 10 More money would incentivize young employees to save for retirement Q Which if any of the following would encourage you to save for retirement
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsMore generous tax breaks on long-term savings and pensions 20 44 30 32 27 23 42 42 33 43 40 32 products
Ger
man
yG
erm
any
Access to financial education so that I am more aware of what 24 6 14 21 16 22 21 12 23 24 43 25 I need to do for myself
Swed
enSw
eden
Access to professional financial advice so that I have personalized
Uni
ted
20 24 23 23 15 21 25 9 22 23 44 13 U
nite
drecommendations on what steps
Kin
gdom
Kin
gdom
I need to take
Simpler investment products that 12 33 19 28 20 Fr
ance
18 27 16 32 28 36 10 Fr
ance
I can understand with less jargon
Better and more frequent information about my retirement 16 28 20 27 27 23
Spai
n20 18 25 31 45 22
Spai
nsavings
Better legal protection in case I am 12 18 13 18 10 24 18 13 13 19 21 6 P
olan
dP
olan
dsold the wrong product
A pay rise 46 54 44 64 55 50 70 72 67 64 53 37
A better retirement plan pension H
unga
ryH
unga
ry27 32 25 33 29 26 42 35 39 44 33 32 match from my employer
Other 4 2 1 1 2 2 3 3 2 U
nite
d3 0
Uni
ted
Stat
esSt
ates
Donrsquot know 17 9 16 10 10 12 3 8 8 5 3 17
Not applicable - I already have 3 3 4 2 2 1 1 1 2 2 3 sufficient savings Ca
nada
Cana
da
Chin
aCh
ina
Chart 11 A majority of younger employees do not have a written plan for retirement Q Which of the following best describes your retirement planning strategy
Japa
n Ja
pan
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
I have a written plan 7 18 10 9 6 8 6 5 13 10 8 4
I have a plan but it is not written 24 47 37 25 23 31 29 31 37 44 55 24
down
I do not have a plan 61 32 51 61 62 55 62 58 45 42 34 61
Donrsquot know 7 3 3 5 8 6 3 6 4 4 3 12
41 | The Young Pragmatic and Penniless Generation
Chart 12 For young employees friends and family are the leading source of retirement savings information Q And which of these sources (of information) is most important to you
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
Bank adviser 6 11 19 5 25 5 7 4 3 17 10 2 N
ethe
rlan
dsN
ethe
rlan
dsProfessional financial adviser 12 22 10 12 10 19 19 22 21 25 19 10
Insurance agent spokesperson 3 10 2 3 1 3 6 2 3 0 3 2 G
erm
any
Ger
man
yInsurance company website 3 1 3 2 4 4 2 2 1 3 1
Personal finance websites online 8 5 7 8 5 4 10 8 12 6 10 8 retirement planning tools Sw
eden
Swed
enPersonal finance media 2 2 2 2 2 6 3 1 2 1 6 2
Government website 7 1 3 6 U
nite
d5 2 3 3 2 3 7 1
Uni
ted
Kin
gdom
Kin
gdom
Bank website 2 3 3 2 1 0 3 2 1 6 3 3
My employer 12 8 4 9 4 7 5 12 8 5 4 1 Fr
ance
Fran
ceAccountant 2 6 4 4 1 3 1 3 5 5 1 3
Lawyer 2 3 1 2 2 8 4 2 1 2 2 0 Sp
ain
Spai
nFriends and family 21 22 30 28 24 26 18 24 26 20 25 24
None of these P
olan
dP
olan
dNot applicable 21 7 16 18 19 13 17 15 14 9 5 41
Hun
gary
Hun
gary
Chart 13 Most young workers feel their employer should provide some kind of pension Q In the future what if anything should employers do to help people plan for retirement
Uni
ted
Uni
ted
Stat
esSt
ates
Cana
daCa
nada
Chin
aCh
ina
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 Ja
pan
Japa
n Employers should be required to 24 43 20 40 21 26 20 28 37 34 20 30 contribute to workersrsquo pensions
Employers should be required to make a pension available but not to 12 13 7 17 20 15 15 4 11 14 22 5 contribute into it
Employers should not be required to provide pensions but should 15 9 12 8 9 8 11 6 11 9 9 11 provide information on how to plan for retirement
Employers should provide a range of flexible benefits and 13 18 18 16 15 27 25 28 21 22 45 12 allow individuals to choose which benefits they actually want
Nothing ndash it should be left to individual employees to take care 2 2 5 1 4 3 3 5 6 5 1 9 of themselves
Nothing ndash it should be left to the government to take care of its 2 5 5 2 5 8 15 14 1 4 0 4 citizens
Donrsquot know 30 10 32 17 27 12 12 15 13 13 3 29
The Young Pragmatic and Penniless Generation | 42
Chart 14 Workplace pensions are relatively low down in young workersrsquo priorities when choosing a job Q How important to you would the following workplace benefits be if you were choosing your next job
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsBasic salary 86 93 88 91 88 92 90 94 90 93 96 94
Holiday entitlement 87 94 89 91 92 94 91 94 93 94 96 91 G
erm
any
Ger
man
yOvertime and bonus pay 86 93 87 88 89 90 89 94 90 91 97 90
Location of workplace 88 91 86 92 89 90 89 92 93 93 92 86 Sw
eden
Swed
enMedical health insurance 73 92 84 65 86 87 88 87 93 94 98 83
Opportunities for career progression 86 91 81 90 90 94 91 94 92 91 96 81 U
nite
dU
nite
dAccess to a workplace retirement 85 85 81 82
Kin
gdom
78 84 80 78 84 86 93 74 K
ingd
omplan with employer contributions
Access to good training provision 85 87 85 88 86 91 85 93 86 90 95 74 Fr
ance
Fran
ceFlexible working hours 79 87 58 86 81 89 81 87 91 91 92 57
Life insurance 72 75 79 69 80 82 Sp
ain
84 80 81 88 93 74 Sp
ain
(death in service benefits)
Phased retirement or other employer programs providing for 74 54 75 71 72 81 76 74 76 81 91 65
Pol
and
Pol
and
a transition into retirement
Ability to work past the normal 68 57 64 65 64 74 72 65 74 76 80 70 retirement age H
unga
ryH
unga
ry
Access to a workplace retirement 62 74 61 68 59 77 61 47 68 74 89 65 plan without employer contributions U
nite
dU
nite
dSt
ates
Stat
esEmployee share plans 50 72 54 65 59 73 61 51 64 73 91 55
Access to creche help with the 67 75 64 56 69 79 75 83 58 69 89 68 cost of childcare Ca
nada
Cana
da
Opportunities for foreign travel 53 54 60 55 50 71 58 66 57 61 79 37
Company car 51 46 45 47 49 63 51 49 36 49 69 Ch
ina
39 Ch
ina
Japa
n Ja
pan
Chart 15 Young workers think the state pension will need to be reformed Q With the cost of government pensions becoming a greater concern as people live longer which if any of the following do you think
the government should undertake
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
The government should reduce the overall cost of state pension 15 33 16 15 16 20 28 22 21 26 30 16 provision by reducing the value of individual pension plans
The government should increase overall funding available for the 12 21 30 22 14 34 19 26 21 18 29 10 state pension through raising taxes
43 | The Young Pragmatic and Penniless Generation
he government should take a alanced approach with some 27 26 12 30 28 23 24 16 34 31 38 41 eductions in individual payments nd some increases in tax
he government should not do nything State pension provision 7 2 12 5 3 4 3 3 5 4 0 5 ill remain perfectly affordable in he future
onrsquot know 38 19 29 29 39 20 26 34 19 21 4 28
Net
herl
ands
art 16 Products which protect against investment risk are the most important to young workers ( interested) Thinking about the types of financial products you could purchase to help provide you with security in retirement on a scale of 1 to 5
how interested are you in the following options G
erm
any
Swed
en
Uni
ted
Kin
gdom
ase 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 Fr
ance
100 100 100 100 100 100 100 100 100 100 100 100
product providing a guaranteed etirement income stream or 75 81 73 76 74 83 78 76 87 85 94 69
Spai
nifetime income in retirement
product which protects my 74 79 73 76 72 82 77 74 84 86 94 65 etirement income against inflation P
olan
d
product which guarantees that I 72 82 73 78 75 81 76 73 86 86 90 67 onrsquot lose my initial investment H
unga
ry product which helps meet the ost of long-term care if I become 74 79 74 77 70 79 76 71 86 85 84 66
Uni
ted
nable to look after myself St
ates
product which protects my capital 71 81 71 76 68 76 77 73 84 83 93 65 rom poor investment returns Ca
nada
product which generates a etirement income and allows 69 78 71 75 68 81 77 72 84 86 94 70 e to take a lump sum from the
Chin
anvestment should I need to
product where the annual 66 78 68 75 72 79 77 70 85 86 87 64 anagement charges are kept low Ja
pan
product which enables me to eep some control over how my 71 73 70 75 72 80 75 69 88 85 91 63 avings are invested during my etirement
product which manages the sset allocation so that I am never 68 70 67 73 66 76 71 67 80 83 95 60 xposed to a level of risk Irsquom not omfortable with
product which continues to rovide a retirement income to my 74 78 71 75 73 81 79 73 86 82 94 60 pouse in the event that I die first
product which protects my family gainst having to pay estate taxes 73 76 71 74 75 81 75 69 82 82 89 56 hen I die
product which locks in investment 72 71 63 73 64 71 59 56 81 84 89 61 eturns during the good years
Tbra
Tawt
D
ChQ
B
Arl
Ar
Ad
Acu
Af
Armi
Am
Aksr
Aaec
Aps
Aaw
Ar
The Young Pragmatic and Penniless Generation | 44
Countr y Median Income
lsquo(nearest 000) Married Undergrad degree or more Dependent children (any)
All 20-29 year olds $27500 25 53 25
Netherlands $37000 17 39 20
Germany $38000 33 18 27
Sweden $39000 16 30 32
United Kingdom $48000 24 53 24
France $28000 23 66 26
Spain $23000 13 54 25
Poland $13000 38 57 28
Hungary $6000 31 34 16
United States $43000 26 58 27
Canada $51000 36 55 27
China $18000 31 89 30
Japan $37000 12 63 11
Who are younger employees are also more likely than average to be single and much less
This report defines younger employees as people between likely to have children A quarter are married compared to an
20 and 29 years of age a group that belongs to the Millennials average of 64 for the generation now in their 50s
generation born between 1980 and 2000 This group differs
widely among countries although there are clear trends Education levels vary across the countries included in this research
Many have been in the labor market just a few years after a long due to differences in higher education systems (Chart 1) Overall
period of higher education Unsurprisingly median household those aged 20-29 were more likely than the average respondent
incomes are lower around $27500 according to this research to have at least an undergraduate degree The increasing
compared to an overall median of $46000 Twentysomethings prevalence of education has both positive and negative impacts
Chart 1 A portrait of younger employees Q Which of the following reflects your annual household income before taxes
Q What is your marital status
Q Please choose from the following list the highest level of educational or professional qualification you have
Q How many children do you have who are financially dependent on you Please include all children and stepchildren
Why are young people at risk Such changes will not be achieved easily in the current climate
Todayrsquos young people face a challenging set of circumstances The global financial crisis of 2007-8 not only created a need
An aging society means fewer employees supporting more for long-term structural retirement reforms it also led to the
retirees which is profoundly affecting how societies fund more immediate menace of historically high levels of youth
retirement In most of the countries surveyed lsquotraditionalrsquo unemployment The International Labour Organization (ILO)
retirement provision such as government retirement benefits estimated that in 2013 unemployment affected 73 million young
and other forms of social security or employer-sponsored people aged 15-24 worldwide representing more than 126
retirement arrangements like defined benefit company of all young people iv Across the EU 228 of people under 25
retirement plans are already subject to long-term reforms were unemployed in 2012 and in Spain the figure was 53 v
These reforms will reduce the value of future entitlements It is worth noting that the study is conducted among those who
by lowering retirement income benefits and raising the age are currently employed (part- or full-time) so the findings do not
of retirement and are likely to begin to take full effect from fully take into account the significant number of unemployed
the middle of this century just as the current generation young people
of twentysomethings enters retirement Consequently the
retirement prosperity enjoyed by todayrsquos Baby Boomers will not
be shared by subsequent retiring generations unless there is a
major change in their savings behavior
The Young Pragmatic and Penniless Generation | 8
13
4
16
3
Chart 2 Youth unemployment in 2005 and 2012 across Aegon survey countries (excluding China)
60 1
24
14
3
2005 2
06
2012
23
8
45
15
2
81
19
4
30 2
81
86
79
15 9
4
95
37
8
0 2
65
y
Japan
Spain
19
7
Canad
a
Fran
ce
Poland
Germ
any
Hunga
r
Sweden
OECD tota
l
Nether
lands
53
2
United S
tate
s
United K
ingdom
22
Note Youth unemployment rate of youth labour force (age 15 - 24) vi
23
7
12
2
21
11
3
16
2
The problems of high levels of youth unemployment and economic uncertainty affect those with jobs as well as those without
as they breed lower levels of job security and downward pressure on wages They also have a significant impact on the psychology and
confidence of younger people including those in work and their confidence in their short-term and retirement finances As the survey
findings reveal most young employees expect to find themselves worse off than their parentsrsquo generation when they enter retirement
(Chart 3)
Chart 3 The majority of young employees believe that they will be worse off in retirement compared to their parents Q Do you think that future generations of retirees will be better off or worse off than those currently in retirement
Base 20-29 year olds
Donrsquot knowBetter off
8 13
Total Respondents
2722
20 About
the same
59
Worse off
9 | The Young Pragmatic and Penniless Generation
Another major influence on the ability of young employees to save for retirement is the growth of higher education One positive
is that college graduates are more likely to benefit from lower unemployment rates fare better during economic downturns and
experience higher incomes across their lifetime supporting aspirations like home ownership vii and helping to sustain long-term
savings and increased levels of retirement preparedness (Chart 4)
Chart 4 Graduates are likely to enjoy a greater sense of retirement preparedness Q Thinking about how much you are putting aside to fund your retirement are you saving enough
Base All lsquovery prepared for retirementrsquo
30 27
17 16Postgraduate degree or qualification
College degree University degree Some college or trade school
8 High school graduate
1 Below high school graduate Other
Conversely full-time education delays entry into the labor Why is this group of young employees important arket causing a loss of several years of full-time earnings By the middle of the century todayrsquos 20-29 year olds will
otential Moreover ballooning levels of student debt may have led the world economy through an economic recovery
ignificantly delay the onset of post-graduation saving and dramatic demographic shifts during a period of greater
etween 2004 and 2012 for example student debt in the uncertainty for modern retirement systems and other issues
nited States tripled to $966 billion nationwide The effect In developing countries such as China this group will be more
f this is that todayrsquos younger employees must take greater affluent than their parents but still need to deal with the
ersonal responsibility for their savings a challenge in the consequences of a rapidly aging population and an economy
urrent economic and financial circumstances which has passed its phase of rapid growth
For all of their challenges however this group of young people
represents the biggest opportunity to change societal savings
behaviors for the better The Aegon Retirement Readiness Survey
2013 provides insights into how best to achieve this through a
greater understanding of the grouprsquos outlooks and savings habits
m
p
s
B
U
o
p
c
The Young Pragmatic and Penniless Generation | 10
45
29
20
6
50
24
21
6
56
19
21
4
46
27
21
6
Better off About the same
Worse off Donrsquot know
All work
ers
20-29 ye
ar old
s
Male 2
0-29 ye
ar old
s
Fem
ale 2
0-29 ye
ar old
s
Chinarsquos young employees bucking the gloomy trend optimistic that their economy will continue to expand over
A key finding of this yearrsquos Aegon Retirement Readiness the next 30 years Concerns about the sustainability of
Survey is that Chinese employees are far more confident growth remain however Just 37 of Chinese 20-29 year
and optimistic about their financial future than employees olds believe that the Chinese economy will improve over
in other countries This is also true of younger employees the next 12 months ndash indeed 2013 will see the economyrsquos
Of those Chinese aged 20-29 half (50) believe that they slowest expansion since 1990 x Long term Chinarsquos rapidly
will be better off in retirement than those currently in aging population makes creating a comprehensive and
retirement Younger Chinese men are the most optimistic sound retirement system an urgent priority xi Coverage has
with 56 believing that they will be better off expanded in the past 10 years with reforms such as the
introduction of the Enterprise Annuity in 2005 yet it is still
This optimism is relatively justified Since 1980 Chinese GDP not clear how China will build a universal retirement system
per capita has increased thirty-fold from $193 to $6091 across both the government-sponsored and private sectors
in 2012 viii While this dramatic increase has not benefitted However the success of reforms carried out to date suggests
all Chinese equally ndash by the Chinese governmentrsquos measure that tax incentives and efforts to improve awareness are
99 million rural Chinese live in poverty ix ndash huge progress required as part of any long term solution
has been made and young people in China are generally
Chart 5 Chinarsquos younger employees are confident of a better retirement Q Do you think that future generations of retirees will be better off or worse off than those currently in retirement
Base Respondents in China
11 | The Young Pragmatic and Penniless Generation
Part 2 The savings outlook of young employees This chapter explores the financial behaviors and savings gaps and needs of 20-29 year olds through their attitudes toward financial issues the wider economy and the savings required for a comfortable retirement
The Young Pragmatic and Penniless Generation | 12
75
21
4
69
27
4
64
31
4 5
7
36
7
20-29
30-39
40-49
50-59
44
40
16
NET Low Index (0-5)
NET Medium Index (6-7)
NET High Index (8-10)
60-69
Retirement readiness and young employees However many young employees have concerns about achieving
Retirement is seen as a major life stage by young employees this Over a third (38) are pessimistic that they will not have
They typically expect to spend an average 20 years of their lives enough to live on in retirement and 44 are pessimistic about
in retirement a definition of retirement that is consistent across being able to choose when they retire Furthermore 28 have
all working age groups Retirement conjures broadly positive made no plans at all for their retirement which may help explain
associations Fully 63 of employees in their twenties aspire some of these concerns Health worries are less of an issue with
to travel during retirement 39 see it as a period of leisure 52 being optimistic that they will enjoy good health in old age
and 30 associate it with freedom The need to plan and save although 20 believe that they will not which is perhaps related
for this phase of life is also widely accepted Half (50) of to the 17 who associate retirement with ill health in general
employees in their twenties are aware of the need to save and
64 feel a high or very high degree of personal responsibility Overall 75 of employees in their twenties achieved a low
to ensure sufficient income for retirement retirement readiness score of 0-5 on the Aegon Retirement
Readiness Index (please refer to the glossary and Appendix 1 for
an explanation of the Index) The percentage of employees with a
low score of 0-5 drops with each increase in age group and is 44
among those in the lsquoat retirementrsquo group of 60 to 69 year olds
Chart 6 Aegon Retirement Readiness Index scores for employees across age groups For more information on the ARRI see page 36
Base All aged 20 - 69
Life stage and savings attitudes Getting married and starting a family are two such events
he Retirement Readiness Index reveals that retirement Of employees in their twenties 25 are married and
reparedness is to some extent age- and life stage-related 25 have children whereas for those in their 30s 54 are
hart 6) For younger employees the idea that retirement is married and 56 have children representing a major shift
r awayrsquo combined with lower earnings and other spending toward parenthood
riorities (such as higher education or purchasing a house)
an be powerful obstacles to saving for retirement Thus while Encouragingly while young employees are less likely to
5 of all employees say that they lsquoalways make surersquo that they have started saving for retirement many see themselves as
re saving for retirement just 25 of 20-29 year olds do so future lsquoaspiringrsquo savers Fully 41 intend to save in the future
t present over half (57) of 20-29 year olds are not saving compared to 27 of all employees and only 7 do not intend
r retirement compared to 46 of all employed adults to save for retirement This large group of aspiring savers
ven in China where 44 are always saving for retirement who are committed to the idea of putting money aside for
st 32 of 20-29 year olds do so retirement challenges the view that young people are unwilling
to save Furthermore since converting these young employees
his life cycle effect can be seen in numerous ways At the from aspiring savers to regular savers may depend on the
utset of adult life employees experience lower income and right economic conditions and appropriate financial incentives
igher spending as they prioritize and fund life events with a helping them is a major opportunity for governments and
ignificant impact on their ability or desire to save for retirement employers
T
p
(C
lsquofa
p
c
3
a
A
fo
E
ju
T
o
h
s
13 | The Young Pragmatic and Penniless Generation
35 25 20 19 12 9 27 41 7 7
I always make sure I only save for I am not saving for I am not saving for I have never saved that I am saving retirement occasionally retirement now although retirement though for retirement and for retirement from time to time I have in the past I do intend to donrsquot intend to
All 20 to 29 year olds
NET Low Index (0-5)
NET Medium Index (6-7)
NET High Index (8-10)
Chart 7 Younger employees are much more likely to aspire to save for retirement but the majority are not saving Q Which of the following best explains your approach to saving for retirement This can include money you contribute to any
long-term investment including pensions stocks and shares investment-linked insurances property etc
Other findings support the assertion that younger savers This can be seen in Chart 8 More 20-29 year olds claim that
are open to increasing their retirement savings Over a third they are not likely to be saving for retirement by any means
(37) of 20-29 year olds feel lsquovery responsiblersquo for ensuring (17 against 12 for all adults) and are generally less likely
a sufficient retirement income Note however that this does to use any of the savings products mentioned Revealingly
not translate into better developed financial plans and savings 20-29 year olds are far less likely to name lsquogovernment benefits
strategies Only 7 in this age group feel they have lsquowell in retirementrsquo as a source of retirement income although almost
developedrsquo personal retirement plans and 33 say they are all respondents have some such entitlement This may be due
lsquohardly saving anythingrsquo for retirement Clearly awareness of the to unawareness of government benefits and or greater
retirement situation does not translate into actual retirement scepticism about governmentsrsquo ability or willingness to
planning activity provide for them in old age
The Young Pragmatic and Penniless Generation | 14
Chart 8 Younger people are more likely not to be using any means of retirement savings Q Which financial means if any are you currently using to prepare for your retirement
33 Savings accounts 31
36 Government pension social security 24
25 Defined benefit plan 21
22 Private pension 17
23 Defined contribution plan 15
20 Life insurance 15
14 Stocks 10
14 My home 9
12 Mutual funds 8
9 Inheritance 7
9 Bonds 7
8 Investment property 7
5 Employee stock purchase 5
5 Investment insurances (annuities) 4
4 Long-term care insurance 4
6 Annuities 3
My business 2 3
Reverse mortgage 1 1
Other 3 2
12 None nothing 17
6 Donrsquot know 10
All 20 to 29 year olds
Leisure
Freedom
Far away
Insecurity
Enjoyment
Poverty
Ill health
Boredom
Opportunity
Dependent on others
Loneliness
Tired
Excitement
None of the above
Donrsquot know
Retirement associations What does the younger generation feel about retirement and want to get out of it Perhaps unsurprisingly 20-29 year olds are more
likely to be negative than older respondents associating retirement with boredom loneliness and ill health They are also far more
likely to believe retirement is lsquofar awayrsquo which is likely to be a barrier to retirement saving
15 | The Young Pragmatic and Penniless Generation
Chart 9 The younger generation has more negative associations with retirement Q Which if any of the following words do you most associate with retirement
44 Leisure 39
36 Freedom 30
17 Far away 26
25 Insecurity 25
25 Enjoyment 21
19 Poverty 19
15 Ill health 17
9 Boredom
13
16 Opportunity
13
10 Dependent on others
12
9 Loneliness
11
0
r olds
7Tired
1
6Excitement
6
2None of the above
1
2Donrsquot know 2
All 20 to 29 yea
Aspirations and responsibilities for retirement Income levels in retirement ung people have similar retirement aspirations to the general A high proportion (47) do not know if they are on course
pulation for example travel (63) spending time with to achieve their retirement income goal Combined with the
iends and family (61) and pursuing new hobbies (52) high level of financial responsibility young employees expect
r them however retirement also includes the responsibility of to assume in retirement it is clear that people not only need
ring for others Two-fifths (40) believe that lsquoadult children to build much greater awareness of what kind of financial
retirees should help through providing financial support to pressures they are likely to face in retirement but also require
eir parents if neededrsquo and 28 believe that this will affect greater support in establishing realistic retirement income
em directly in retirement through providing financial support targets which are capable of meeting their needs
their parents A fifth (21) also expect to spend some of
eir retirement caring for other family members while just
donrsquot expect to provide for anyone compared to 40 of all
ployees Clearly todayrsquos young employees anticipate serious
ancial responsibilities in their retirement
Yo
po
fr
Fo
ca
of
th
th
to
th
30
em
fin
The Young Pragmatic and Penniless Generation | 16
Chart 10 Many young employees do not think that they are on course to achieve target retirement income Q Do you think you will achieve this income [your estimated income needed in retirement]
Base 20-29 year olds
Yes I am on course to achieve my retirement
income
16
47
12
16
10
I donrsquot know if I am on course to achieve my
retirement income
No I am on course to achieve around
one-quarter (25) of
No I am on course to achieve around half of my
retirement income
No I am on course to achieve around
three-quarters (75) of my retirement income
532
China
586
Japan
United S
tate
s
628
Poland
635
Canad
a
636
Hunga
r
638
y
Fran
ce
645 647
Spain
Sweden
649
United K
ingdom
651
Germ
any
653
Nether
lands
666
my retirement income
When will young people retire Media reports about the need to raise the age of retirement appear to have influenced younger employees Fully 44 of 20-29 year
olds do not expect to be able to choose their retirement date although the younger generation do expect to retire at a similar age
to older employees 63 This varies considerable by country In the Netherlands young employees expect to retire eight years later
than those in Japan Some countries such as China and Japan have surprisingly low expected retirement ages suggesting that young
employees may benefit from having a better understanding of when government or workplace retirement benefits kick in
Chart 11 Young people in most countries expect to retire before 65 Q At what age do you expect to retire from all paid employment
Base 20-29 year olds
Despite expecting to retire at the same age as their parents younger employees are more open to a transition into retirement
reflecting their more flexible outlook toward work Around half (51) are happy to change the way they work in some way as they move
into retirement Just 8 expect to keep working as they do currently
17 | The Young Pragmatic and Penniless Generation
Part 3 What is holding young employees back Insights into what young employees feel is holding them back from saving or saving more can be used to encourage younger people to adopt more positive savings behaviors This chapter explores the attitudes of young employees toward the financial obstacles they face and asks what actions they have taken in preparation for retirement The findings reveal that while the majority lacks adequate planning for their retirement needs financial shortcomings are only part of the stor y Spending preferences play a key role in the savings gap of advanced economies
The Young Pragmatic and Penniless Generation | 18
Lack of money to invest 37
16 The uncertain economic environment
7 Fear of poor investment returns over the coming years
6 I donrsquot trust the financial services industry
6 I donrsquot know how to go about investing for the long-term
4 oncerns about unstable currencies currency fluctuations
4 Complexity of investment products
4 I canrsquot afford to take financial advice
3 The fees charged by financial services companies
3 I donrsquot see the need to save for the long-term
Other 2
Donrsquot know 8
A pay rise
More generous tax breaks on long-term savings and pensions products
A better retirement plan pension match from my employer
Better and more frequent information about my retirement savings
Simpler investment products that I can understand with less jargon
Access to professional financial advice so that I have personalized recommendations on what steps I need to take
Access to financial education so that I am more aware of what I need to do for myself
Better legal protection in case I am sold the wrong product
Other
Not applicable - I already have sufficient savings
Donrsquot know
Obstacles and incentives to saving
Chart 12 Younger employees feel they donrsquot have money to invest for retirement Q What is the single biggest obstacle to you saving for retirement right now
Base 20-29 year olds
C
What is the single biggest obstacle preventing twentysomethings that they rank pressing and desirable life goals such as marriage
m saving for retirement Not having enough money to invest starting a family vacations and other leisure activities above the
top of the list cited by over a third (37) although this figure need to plan for retirement This suggests the savings gap is
ops to just 6 in the emerging market of China where mean preference-driven
omes are the lowest by far ($18000) suggesting that lack of
sh may be partly a state of mind Young employees in China The biggest obstacle to retirement savings cited by one-eighth
actually more worried about local concerns such as economic (13) of respondents is either not knowing how to invest for the
certainty (29) and currency instability (15) Behavioral long-term or the complexity of investment products charges and
ance has an impact too with the way young employees frame fees Ready solutions to this include improving young employeesrsquo
eir financial priorities creating its own obstacles to saving financial literacy about retirement planning and creating easier
many as 57 of 20-29 year olds believe that saving for access to professional financial advice
tirement is important but not a current priority suggesting
fro
is
dr
inc
ca
are
un
fin
th
As
re
19 | The Young Pragmatic and Penniless Generation
Chart 13 More money would incentivize young employees to save for retirement Q Which if any of the following would encourage you to save for retirement
Base 20-29 year olds
57 A pay rise
More generous tax breaks on long-term savings and pensions products
34
A better retirement plan pension match from my employer
33
Better and more frequent information about my retirement savings 26
Simpler investment products that I can understand with less jargon 24
Access to professional financial advice so that I have personalized recommendations on what steps I need to take 23
Access to financial education so that I am more aware of what I need to do for myself 22
Better legal protection in case I am sold the wrong product 16
Other 2
Not applicable - I already have sufficient savings 2
Donrsquot know 10
Chart 14 Very few younger employees have a written plan for retirement Q Which of the following best describes your retirement planning strategy
Base 20-29 year olds
5 Donrsquot know I have a
written plan
8
34 I have a plan but it is not
52 written down
I do not have a plan
Turning to incentives greater remuneration predictably tops a list Retirement planning of what would encourage 20-29 year olds to save for retirement Retirement planning is essential to adequate retirement saving
More tellingly a third (33) would like their employer to provide although it is somewhat lacking in todayrsquos younger employees
a better retirement plan into which both parties contribute Over half (52) have no retirement planning strategy at all
Better information and simple products would also help more and only 8 have noted down their retirement strategy
people to save A quarter (26) would be encouraged to save by
better and more frequent information about retirement savings Nevertheless the respondents polled believe that the current
while a similar number (24) want simple investment products global economy makes retirement planning increasingly
that are easy to understand As with the previous question a important ndash 71 agreed with this statement It is clear from this
lack of investment knowledge and the complexity of investment that young people between the ages of 20 and 29 do not lack
products are revealed as obstacles to savings the will to save they lack the opportunity
The Young Pragmatic and Penniless Generation | 20
Part 4 Creating the right conditions for young employees to save How may young employeesrsquo obstacles to saving be overcome For retirement readiness this will be a defining question of the early twenty-first centur y ndash and an extremely challenging one given the number of serious issues affecting younger employeesrsquo finances What was learned in the previous chapter about encouraging young employees to save is a start This chapter examines which areas and triggers to saving can be unlocked and whether government employer or individual should take most responsibility
21 | The Young Pragmatic and Penniless Generation
Friends and family
Professional financial adviser
17
24
Bank adviser 9
Personal finance websites online retirement planning tools
My employer
Government website
4
8
7
Insurance agent spokesperson
Accountant
3
3
Personal finance media 3
Lawyer
Bank website
3
2
Insurance company website
Donrsquot know
2
15
Information and advice on retirement saving strong theme revealed by our findings is that younger This finding is remarkably consistent across the countries
mployees want more information on savings products and sur veyed despite significant differences in market makeup
etter access to advice The largest share 24 (compared although some differences exist For instance a quar ter
o 17 for all employees) finds friends and family to be the (25) of young employees in France turn to bank advisers
ost important source of advice followed by professional for financial information nearly triple the number among all
dvisers (17) and bank advisers (9) That young employees young people (9)
urn to friends and family first suggests an unmet need for
rofessional financial advice This is both a challenge and an
pportunity for the financial ser vices sector
hart 15 For young employees friends and family are the leading source of retirement savings information Which of these sources (of information) is most important to you
ase 20-29 year olds
A
e
b
t
m
a
t
p
o
CQ
B
What is the role of the workplace in retirement planning Does this influence what retirement benefits younger
In response to shifting employment patterns todayrsquos younger employees expect from their workplace Certainly a majority
employees are less loyal to their employers than older workers favor workplace retirement plans with 61 believing that these
Fully 39 of 20-29 year olds are planning to look for a new job should be a fundamental part of pay (although this is lower
in the next 12 months compared to 29 of all workers and than for employees overall) and just 4 feel that retirement
31 frequently think about quitting their jobs Strikingly while planning should be left entirely to individuals
53 of all workers plan to stay with their current employer
until retirement just 37 of 20-29 year olds say this However there is evidence of a slight shift in perceptions
Younger workers are less likely to want workplace retirement
Doubtless much of this is because younger workers are more plans over other factors Of those who want employer
mobile and have more opportunities Another trigger to lower retirement plan contributions only 46 wanted this even if
employer loyalty may be the expectation of holding more jobs it reduced benefits and 35 (compared to 43 of all workers)
and even pursuing multiple careers over a working lifetime if it cut jobs
The Young Pragmatic and Penniless Generation | 22
Donrsquot know Employers should be
required to contribute to workersrsquo pensions
5 Nothing ndash it should be left to the government to take 18
care of its citizens 28
4 Nothing ndash it should be left to individual employees to
take care of themselves
13
22
Employers should provide a range of flexible benefits
and allow individuals to choose which benefits they
actually want
10 Employers should
be required to make a pension available but not
to contribute into it
Employers should not be required to provide pensions but should
provide information on how to plan for retirement
Chart 16 Most young workers feel that their employer should provide some kind of pension Q In the future what if anything should employers do to help people plan for retirement
Base 20-29 year olds
Are other workplace benefits more important Younger workers were asked to rate the importance of various workplace benefits The results reveal how highly they value the
elements of their compensation package Chart 17 shows that 87 of young employees believe a workplace retirement plan with
employer contributions would be an important factor when choosing their next job While retirement may be decades away for
twentysomethings 80 believe programs provide for a phased retirement are important
23 | The Young Pragmatic and Penniless Generation
Basic salary 94
93 Holiday entitlement
91 Overtime and bonus pay
91 Location of workplace
88 Medical health insurance
87 Opportunities for career progression
Access to a workplace retirement plan with employer contributions 87
Access to good training provision 86
Flexible working hours 85
Life insurance (death in service benefits) 81
Phased retirement or other employer programs providing for a transition into retirement 80
Ability to work past the normal retirement age 70
Access to a workplace retirement plan without employer contributions
67
Employee stock plans 65
Access to creche help with the cost of childcare 59
Opportunities for foreign travel 50
Company car 43
Chart 17 Workplace retirement plans are a relatively low priority for younger workers when choosing a job How important to you would the following workplace benefits be if you were choosing your next job
ase 20-29 year olds
Q
B
Regarding workplace benefits provided by employers today considered just enough to fulfill basic needs and in China a
young employees are about as likely as all workers to be offered fully formed nationwide retirement system is still some way off
retirement tools such as annual plan statements and online The future shape and affordability of these plans is debated in
tools from their employer though it is concerning that 24 do all of the sur vey countries to var ying degrees
not know if such tools are available or not Those provided are
considered helpful Younger workersrsquo views on reform are important because
changes to government retirement benefits are more likely
The role of government to affect them than any other part of the working population
The generosity of government retirement benefits varies The main concern cited by 57 is of facing less generous
considerably in the countries sur veyed In some countries such government retirement benefits than those enjoyed by their
as France government benefits are the primar y mechanism parentsrsquo generation
for funding retirement while in the United Kingdom they are
The Young Pragmatic and Penniless Generation | 24
The government should reduce the overall cost of state pension provision by
reducing the value of Donrsquot know individual pension plans
25 22
4 The government should not do anything State pension provision will
remain perfectly affordable in the future
28
21 The government should increase overall funding
available for the state pension through
raising taxes
The government should take a balanced approach with some reductions in individual payments and
some increases in tax
Chart 18 Young workers think that the government retirement system will need to be reformed Q With the cost of government retirement benefits becoming a greater concern as people live longer which
if any of the following do you think the government should undertake
Base 20-29 year olds
The younger generation believes that the government cannot What do young employees look for in a retirement product continue to provide as it does now ndash just 4 think government The sur vey findings show that young employees have
benefits will remain affordable to society However there is no reser vations about employer and government retirement
consensus on what governments should do to reform retirement benefits So what then do they want from a private savings
plan systems Over a fifth (22) think retirement entitlements product The savings product feature most valued by younger
should be cut just over a fifth (21) think governments should workers is protection against investment risk (Char t 19)
raise taxes and more than a quarter (28) think a mixture of This may be in the form of no loss of initial investment a
the two is the best solution Another quarter admits that they guaranteed income stream or protection against inflation
donrsquot know what should be done This is reasonable ndash the initial investment of those farthest
from retirement is most at risk However less consideration
is given to savings grow th through investment returns This
suggests that there is an oppor tunity to educate young
workers about the trade-off between returns and risk
management and what they stand to gain
25 | The Young Pragmatic and Penniless Generation
Chart 19 Products which protect against investment risk are the most important to young workers ( interested) Q Thinking about the types of financial products you could purchase to help provide you with security in retirement on a scale of 1 to 5
how interested are you in the following options
Base 20-29 year olds
A product providing a guaranteed retirement income stream or lifetime income in retirement 82
A product which protects my retirement income against inflation 81
A product which guarantees that I donrsquot lose my initial investment 81
A product which helps meet the cost of long-term care if I become unable to look after myself 80
A product which protects my capital from poor investment returns 79
A product which generates a retirement income and allows me to take a lump sum from the investment should I need to 79
A product where the annual management charges are kept low 78
A product which enables me to keep some control over how my savings are invested during my retirement 77
A product which manages the asset allocation so that I am never exposed to a level of risk Irsquom not comfortable with 76
A product which continues to provide a retirement income to my spouse in the event that I die first 75
A product which protects my family against having to pay estate taxes when I die 72
A product which locks in investment returns during the good years 70
The lsquodefined ambitionrsquo retirement system in This removes some of the disadvantages of leaving
the Netherlands a sustainable retirement solution retirement liabilities exclusively up to employers
for young workers (defined benefit) or employees (defined contribution)
In the Netherlands as elsewhere young workers are faced In the Netherlands this is likely to involve legislation which
with an increasing retirement age decreasing government lets retirement funds automatically adjust pay-outs and
suppor t for retirement and declining traditional defined retirement age as life expectancy changes xii
benefit employer retirement plans Reforms proposed
by the Dutch may show a way for ward for all mature and This model has garnered interest elsewhere In the
aging economies United Kingdom Pensions Minister Steve Webb expressed
interest on a more limited scale with a government
rsquoDefined ambitionrsquo proposes that risks are not taken on fully guarantee for a minimum rate of return for defined
by either employer or employee but are shared contribution retirement plans
The Young Pragmatic and Penniless Generation | 26
Recommendations Enabling young workers to save The studyrsquos findings reveal that the majority of young workers (66) are either saving consistently or aspire to start saving but face challenges including debt low pay and funding for significant life events and generational changes to the economic landscape and government and employer support If young people are to achieve a prosperous retirement their willingness to save should be met with better opportunities to save Here is what can be done by employers governments and young people themselves to address retirement planning concerns for younger adults
27 | The Young Pragmatic and Penniless Generation
Individuals Employers and governments
Determine how much income you need in retirement Auto-enroll employees into a workplace retirement plan Young people accept the need to save for retirement but donrsquot If an auto-enrollment workplace retirement plan is feasible
know how to act on that need They can become more retirement this can play a major role in getting young workers saving early
savvy simply by talking to friends and family (as do 24 of and regularly Combined with auto-escalation (the automatic
our respondents already) or employers going online to use annual increase in retirement plan contributions) and matching
retirement calculators or reading the personal finance media contributions it can lead to greater retirement readiness
Seek out a financial advisor Provide more flexible savings products through the workplace Young people are faced with life events that make it easy to Not all savings journeys start with a retirement plan particularly
feel overwhelmed by financial priorities in addition to retirement for young people who may think of retirement as lsquotoo far awayrsquo
planning Soliciting advice from a finance professional early in Employers can kick-start the savings habit in younger workers
life (17 of young employees have done so already) helps with by providing flexible easy to access and easy to understand
planning and priorities and making sense of long-term finances savings plans as a more attractive starter option
Start saving now and save consistently Make company retirement plans more portable As with all employees young people will strengthen their Young people move jobs much more often than previous
retirement readiness simply by saving regularly Today only 25 generations of employees so savings like DC retirement plans
of young people always save yet even small regular amounts need to follow employees when they change jobs
will improve retirement readiness over time
Make tax incentives more effective Ask your employer about workplace retirement savings plans All countries encourage long-term savings through tax relief but
and other retirement benefits young people often arenrsquot aware of this or donrsquot understand it
While one third (33) of young people believe that a workplace A more targeted system of tax relief could help provide clearer
retirement savings plan provides a major opportunity to start and simpler signals to younger people about the financial
saving employers often experience difficulties in engaging benefits of long-term saving
younger employees in discussions about retirement planning
The workplace is an important channel for achieving retirement Make better financial education central to the workplace readiness so be sure to max out on any employer contributions retirement offer
Young people who aspire to save may be prevented from
doing so by setting the wrong financial priorities Workplace
retirement education ndash alongside professional advice ndash can help
guide young people toward the right long-term priorities at an
earlier age in life
The Young Pragmatic and Penniless Generation | 28
29 | The Young Pragmatic and Penniless Generation
Glossary
Aegon Retirement Readiness Index (ARRI) c areer average retirement plan The ARRI assesses the relative levels of retirement A type of defined benefit plan that is based on an
preparedness of employees across different countries on a employeersquos average retirement earnings over the duration
scale from 1 to 10 The Index is based on three questions of plan membership Same as average salary plan
covering attitudes and three questions covering behaviors
defined ambition (DA) plan average salary plan A type of retirement plan in which retirement plan risks
A type of defined benefit plan that is based on an are shared between the employer and the employee
employeersquos average retirement earnings over the duration It offers greater certainty to savers around the final value
of plan membership Same as career average plan of their retirement assets than in DC plans and less
cost volatility for employers than with DB plans In the
a nnuity Netherlands Defined Ambition (DA) retirement plans are
A form of contract sold by life insurance companies that being introduced in order to help relieve the pressure on
guarantees a fixed or variable payment to the annuitant employers while still trying to provide employees with a
at some future time usually retirement All capital in the more secure retirement plan The United Kingdom too is
annuity grows tax-deferred looking at DA retirement plans as a solution
auto enrollment defined benefit (DB) plan An employer-sponsored retirement plan in which the An employer-sponsored retirement plan where the amount
employer is able to enroll an employee without that of future benefits an employee will receive from the plan is
employeersquos express authorization The employer determines defined typically by a formula based on salary history and
what percentage of the employeersquos salary or wages is years of service The amount of contributions the employer
contributed to the plan The employee is able to change is required to make will depend on the investment returns
this percentage and can opt out of enrollment in the plan experienced by the plan and the benefits promised
Contrast defined contribution plan
a uto-escalation A feature of a plan which automatically increases the defined contribution (DC) plan percentage of (retirement) funds saved from salary An employer-sponsored retirement plan such as a 401(k)
This feature generally uses a default or standard plan or a 403(b) plan in the United States in which
contribution escalation rate contributions are made to individual participant accounts
Depending on the type of DC plan contributions may be
B aby Boomers made by the employee the employer or both
A term used to refer to people generally born between
the end of World War II in 1945 and the mid 1960s The employeersquos benefits at retirement or termination of
Other generations Silent Generation - the generation born employment are based on the employee and employer
between 1925 and 1945 Generation X - the generation contributions and earnings and losses on those
born between 1965 and 1979 Millennials or Generation contributions See also 401(k) and 403(b) plan
Y - the generation born between 1980 and 2000 and often Contrast defined benefit plan
classified as the children of Baby Boomers
The Young Pragmatic and Penniless Generation | 30
401(k) plan An employer sponsored retirement plan that enables
employees to make tax-deferred contributions from their
salaries to the plan
403(b) plan An employer-sponsored defined contribution plan that
enables employees of universities public schools and
non-profit organizations to make tax-deferred contributions
from their salaries to the plan
final salary plan A type of defined benefit plan in which retirement
benefits are based on final retirement salary in the years
immediately before retirement benefits are received
Millennials A term used to refer to the people born from about 1980
to 2000 brought up using digital technology They are
often classified as the children of Baby Boomers
r etirement (or pension) plan Provides replacement for salary when a person is no
longer working due to retirement In the case of a defined
benefit retirement plan the employer or union contributes
to the plan which pays a predetermined benefit for the
rest of the employeersquos life based on length of service and
salary Payments may be made either directly or through
an annuity Retirement plan payments are taxable income
to recipients in the year received The employer or union
has fiduciary responsibility to invest the retirement plan
funds in stocks bonds real estate and other assets earn
a satisfactory rate of return and make payments to retired
workers Retirement plan funds holding trillions of dollars
are one of the largest investment forces in the stock
bond and real estate markets If the employer defaults in
the United States retirement plan payments are usually
guaranteed by the Pension Benefit Guaranty Corporation
(PBGC)
variable annuities (VA) An insurance contract in which the insurance company
guarantees a minimum payment at the end of the
accumulation period The payments may vary depending
on the financial performance of the managed portfolio
31 | The Young Pragmatic and Penniless Generation
About Aegon Transamerica Center for Retirement Studiesreg and Cicero Consulting
Aegon Transamerica Center Aegon is an international life insurance pensions and asset reg management company with businesses in over 20 markets for Retirement Studies in the Americas Europe and Asia Aegon companies employ The Transamerica Center for Retirement Studiesreg (TCRS) is
around 24000 people and serve millions of customers a division of the Transamerica Institute a nonprofit private
worldwide foundation TCRS is dedicated to educating the public on
wwwaegoncom emerging trends surrounding retirement security in the
United States TCRSrsquo research emphasizes employer-sponsored
In 2010 Aegon became a founding member of the Global retirement plans issues faced by small to mid-sized companies
Coalition on Aging which seeks to raise awareness of aging and their employees and the implications of legislative and
issues among policymakers and the general public A major aim regulatory changes Transamerica Institute is funded by
of the coalition is to transform the way we think and speak contributions from Transamerica Life Insurance Company and
about aging replacing the familiar rhetoric of lsquoproblemsrsquo with its affiliates and may receive funds from unaffiliated third-
a more positive discussion of lsquopossibilitiesrsquo and lsquoopportunitiesrsquo parties For more information about TCRS please refer to
wwwglobalcoalitiononagingcom wwwtransamericacenterorg
Cicero Consulting A leading consultancy firm serving the banking insurance and
asset management sector Cicero specializes in public policy
and communications consulting as well as global thought
leadership and independent market research Cicero was
established in 2001 and now operates from offices in London
Brussels Washington and Singapore As a market leader in
pensions and retirement research Cicero designed
and analyzed the research and contributed to the report
wwwcicero-groupcom
The Young Pragmatic and Penniless Generation | 32
Marta acebo Mark Green Patricia Plas
Paula alvarez douGlas henck scott roane
Frits bart wendel hoFMan thurstan robinson
Grace basile
lynette belFry
andrew berwick
Frans van der horst
tatsuo kai
herMan kaPPelle
Patti rowey
sarah russell
Joost van schaGen
robin boon Gaacutebor kePecs dick schiethart
bert-JaaP brons Marco keiM erik schouten
douG brooks
libby buet
kent callahan
JaiMe kirkPatrick
bas knol
roGer koch
anGela seyMour Jackson
kate sMith
renske stoker
Jeanne de cervens
dana chen
Peter kunkel
alexander kuiPers
eyleen sun
MartiJn tans
arkadiusz chMurzynski
heidi cho
brian lewis
Mike linder
GreG tucker
Mark twiGG
siMon clow siMon luke catherine wanG
robert colliGnon Jason Ma Marc van weede
catherine collinson GrzeGorz Mathea tiM willaert
wendy daniels
Michel denizot
edit drevenka
Paul Middleton
takaoh MiyaGawa
david Moulton
daniel wriGht
alex wynaendts
MacieJ zaPala
Jan driessen
kelly Fu
adrian Grace
Mark Mullin
Marcelle noltenius
stiG nybo
Peacuteter zatykoacute
vicky zeldin
Disclaimer This repor t contains general information only and does
not constitute a solicitation or offer No rights can be
derived from this repor t Aegon its par tners and any of
their affiliates or employees do not guarantee warrant
or represent the accuracy or completeness of the
information contained in the repor t
Acknowledgements
33 | The Young Pragmatic and Penniless Generation
References and notes i For a comparison of different retirement systems see lsquoPensions at a Glance 2011rsquo OECD 2011 ii As the survey was carried out online the survey results in China are based toward people living in urban areas iii ldquoPensions Marketsrdquo TheCityUK March 2013 p9 iv Global Employment Trends for Youth 2013 A generation at risk International Labour Organisation 2013 p2 v Eurostat July 2013 vi OECD Employment and Labour Markets Key Tables from OECD No 2 2012 vii The Federal Reserve Bank of New York 2012 Quarterly Report on Household Debt March 29 2013 viii World Bank ix lsquoWorld-class povertyrsquo The Economist February 27 2013
httpwwweconomistcomblogsanalects201302chinas-poor x lsquoThe Chinese slow down in char tsrsquo The Economist July 15 2013 xi lsquoChina rsquos welfare system difficult inflexible and blatantly unfairrsquo The Guardian April 23 2013
httpwwwtheguardiancomglobal-development2013apr23china-welfare-system-inflexible-unfair xii lsquo The Dutch experience with Defined Ambition pensions and the impact on companiesrsquo Aegon Global Pensions March 12 2013
httpwwwaegonglobalpensionscomenHomePublicationsNews-archiveNewsThe-Dutch-experience-with-Defined
Ambition-pensions-and-what-that-may-mean-for-companies-in-the-Netherlands-and-the-UK
shy
The Young Pragmatic and Penniless Generation | 34
Contact information HE ADQUARTER S
Aegon NV
PO Box 85
2501 CB The Hague
Telephone +31 70 344 32 10
w w waegoncom
MEDIA REL ATIONS
Telephone +31 70 344 89 56
Email gcc-iraegoncom
Countr y Index score
Germany 548
China 541
Canada 524
United States 519
The Netherlands 488
United Kingdom 486
Sweden 483
France 475
Hungar y 473
Poland 463
Spain 440
Japan 430
Total 489
Appendix 1 Aegon Retirement Readiness Index (ARRI) - technical note
Aegon Retirement Readiness Index (ARRI)-technical note 2013 Weightings (2012 in brackets) A sample of 12000 pre and post retirees was drawn from 1 Personal responsibilit y 20 (30)
twelve countries Of these 10800 (90) were pre-retirees 2 Level of awareness 30 (35)
and these were chosen for fur ther analysis of their plans 3 Financial capability Understanding 30 (25)
for retirement The Index that was developed forms an 4 Retirement planning 50 (50)
assessment of how well an individual perceives the adequacy 5 Financial preparedness 60 (60)
of his her own finances and financial awareness specifically 6 Income replacement 35 (35)
for addressing his retirement needs
Note that the weights devised to show the relative
The lsquotargetrsquo for the Index impor tance of each question in calculating the Index add to
The question on current savings activity was designated as the 225 These were then re-scaled so that a final scale of 1 to
target question (dependent variable) for predicting the level of 10 was calculated
preparedness for retirement Responses to this question were
then correlated with each of the six key questions (variables) Final scores by country below to understand which were driving the activity These weightings were multiplied by the actual scores for each
This was done because it was not felt to be correct to give respondent for each of the six Index questions and aggregated
each of the six variables described below an equal weight as to obtain a provisional score This was then adjusted to
they appeared to have quite different relationships to the give countr y scores out of 1 to 10 (A score of 1 to 10 had
target question sufficient differentiation to be used as the scale for analysis)
1 Personal responsibilit y for income in retirement
2 Level of awareness of need to plan for retirement
3 F inancial capability Understanding of financial matters
regarding plans for retirement
4 Retirement planning Level of development of plans
5 Financial preparedness for retirement
6 Income replacement Level of projected income replacement
The weighting To estimate the statistical significance of the decline in overall
scores in this yearrsquos Index is theoretically incalculable
Two things have changed from 2012 to 2013
1 C anada and China have joined the sample
2 The new countries have thus influenced the weights of
emphasis placed on the 6 variables used to calculate
the score hence the weights attached to the complex
calculation have changed
However it is noticeable that for countries which were sampled
in both time periods the mean scores for the six individual
variables have almost invariably declined and on average more
than half of them have shown a significant level of decline
In particular the question lsquoDo you think you will achieve this
incomersquo has for all countries shown a significant level of
decline We thus hypothesize that the comparative results
show a significant decline
The Young Pragmatic and Penniless Generation | 36
Net
herl
ands
Net
herl
ands
Net
herl
ands
Ger
man
yG
erm
any
Ger
man
yBase 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
Better off 7 4 23 Sw
eden
Swed
en11 5 7 8 3 11 14 50 5
Swed
en
About the same 19 18 27 23 8 19 18 13 29 29 24 21 U
ntie
dU
ntie
dU
nite
d Worse off 66 74 41 58 79 69 71 76 51 47 21 55
Kin
gdom
Kin
gdom
Kin
gdom
Donrsquot know 9 3 9 9 9 4 4 8 9 10 6 19
Fran
ceFr
ance
Fran
ce
Chart 2 Education of 20 ndash 29 year olds by country Q Please choose from the following list the highest level of educational or professional qualification you have
Spai
nSp
ain
Spa
in
Pol
and
Pol
and
Pol
and
Hun
gary
Hun
gary
Hun
gar y
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
dU
nite
d 100 100 100 100 100 100 100 100 100
Stat
es100 100 100
Stat
esSt
ates
Less than high school graduate 2 44 6 14 1 3 2 7 1 3 Ca
nada
Cana
daC
anad
aHigh school graduate 11 33 53 23 22 22 4 41 14 21 1 2
Some college or trade school 46 2 9 9 9 19 37 14 28 20 4 33 Ch
ina
Chin
aC
hina
College degree University degree 31 15 27 30 41 43 21 33 50 46 9 57
Postgraduate degree or 8 3 3 23 25 11 36 1 8 9 80 6 qualification Ja
pan
Japa
n Ja
pan
Other 2 4 1 1 1 2 0 5 0 6 2
None 0 1 1 0 1 0 0
NET Less than undergrad degree 61 82 70 47 34 46 43 66 42 45 11 37
NET Undergrad degree or higher 39 18 30 53 66 54 57 34 58 55 89 63
Chart 3 Aegon Retirement Readiness Index scores for young employees by country
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
NET Low Index (0-5) 80 64 79 81 85 78 81 73 65 61 61 87
NET Medium Index (6-7) 15 30 18 15 14 21 17 23 25 31 31 12
NET High Index (8-10) 4 6 3 3 1 2 2 4 10 8 7 1
Appendix 2 Country comparisons Chart 1 The majority of young employees believe that they will be worse off in retirement compared to their parents Q Do you think that future generations of retirees will be better off or worse off than those currently in retirement
37 | The Young Pragmatic and Penniless Generation
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsI always make sure that 27 34 27 26 17 14 19 22 35 33 32 20 I am saving for retirement
I only save for retirement G
erm
any
Ger
man
y21 27 20 13 17 21 16 6 17 24 20 24 occasionally from time to time
I am not saving for retirement now 6 11 8 11 5 15 9 4 10 8 9 5 although I have in the past Sw
eden
Swed
en
I am not saving for retirement 35 23 34 46 53 40 49 54 36 33 38 46 though I do intend to U
nite
dU
ntie
dK
ingd
omK
ingd
om I have never saved for retirement and 11 6 10 5 8 10 6 13 3 2 1 6 donrsquot intend to
Fran
ceFr
ance
Chart 5 Younger people are more likely not to be using any means of retirement savings Sp
ain
Spai
nQ Which financial means if any are you currently using to prepare for your retirement
Pol
and
Pol
and
only asked in Germany only asked in Spain
Hun
gary
Hun
gary
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
dSt
ates
Stat
es100 100 100 100 100 100 100 100 100 100 100 100
Defined benefit plan 16 10 25 29 15 3 76 11 20 13 5 Ca
nada
Cana
daDefined contribution plan 28 10 17 19 19 14 10 23 40 7 3
Private pension 8 18 14 10 5 9 4 13 12 40 66 4 Ch
ina
Chin
a Government pension social security 12 43 14 21 8 7 4 18 27 33 71 35
Stocks 5 12 14 7 4 17 7 2 13 10 23 9
Bonds 1 8 5 6 2 16 4 2 8 13 14 3 Ja
pan
Japa
n
Mutual funds 2 14 23 4 2 10 3 4 7 16 9 6
Investment insurances (annuities) 2 3 2 3 2 9 4 5 2 4 6 1
Savings accounts 23 37 38 25 23 6 29 15 36 37 65 36
Investment property 2 10 6 7 9 2 5 2 5 11 18 1
Employee stock purchase 1 1 1 4 1 29 0 4 1 7 1
My home 10 5 8 7 7 8 4 6 6 14 30 1
Reverse mortgage 1 4 2 4
My business 2 1 3 2 2 4 1 1 2 4 12 1
Inheritance 3 11 7 11 7 9 9 8 7 9 6 2
Annuities 1 15 2 2 1 4 3 2 1 2 8
Long-term care insurance 2 1 3 2 9 5 1 6 4 7 1
Life insurance 6 11 8 8 14 3 18 15 19 18 36 17
Unterstuumltzungskasse aus 2 Eigenmitteln finanziert
Unterstuumltzungskasse vom 2 Arbeitgeber finanziert
Chart 4 Younger employees are much more likely to aspire to save for retirement Which of the following best explains your approach to saving for retirement This can include money you contribute to any long-term
investment including pensions stocks and shares investment-linked insurances property etc
Q
The Young Pragmatic and Penniless Generation | 38
Plan de empleo mixto 2 (combinacioacuten de las dos anteriores)
Other 1 6 4 0 1 2 2 3 2 2 3 3
None nothing 8 14 12 23 25 31 6 27 21 17 3 24
Donrsquot know 29 6 17 13 19 8 4 9 7 7 0 9
hart 6 The younger generation has more negative associations of retirement Which if any of the following words do you most associate with retirement
Net
herl
ands
Net
herl
ands
Ger
man
yG
erm
any
Swed
enSw
eden
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
d100 100 100 100 100 100 100 100 100 100 100 100
Kin
gdom
Kin
gdom
Freedom 35 32 36 39 19 26 11 20 35 40 37 33
Opportunity 7 27 25 18 4 8 9 10 17 16 9 16 Fr
ance
Fran
ceLeisure 58 48 36 41 23 24 43 32 50 50 55 6
Excitement 2 5 3 8 2 6 1 2 17 17 4 3 Sp
ain
Spai
nPoverty 11 26 23 11 26 14 37 44 7 5 6 20
Insecurity 34 24 18 16 20 18 35 56 10 9 18 44 P
olan
dP
olan
dLoneliness 4 10 17 16 12 7 11 8 5 9 20 12
Ill health 2 19 7 14 15 9 49 23 6 6 29 11 H
unga
ryH
unga
ryDependent on others 11 11 5 18 14 8 18 19 14 6 11 4
Tired 3 4 8 10 14 10 17 6 7 7 13 19 U
nite
dU
nite
dFar away 38 19 25 21 61 32 2 13 33
Stat
es33 14 22
Stat
es
Boredom 14 16 6 12 16 12 15 8 12 12 16 17 Ca
nada
Cana
daEnjoyment 21 16 17 23 14 29 5 3 37 37 35 15
None of the above 0 1 1 2 0 2 1 1 2 2 1 2
Donrsquot know 2 2 3 3 2 2 1 2 0 Ch
ina
6 Ch
ina
hart 7 Many young employees think they are not on course to achieve target retirement income Ja
pan
Japa
n Do you think you will achieve this income [your estimated income needed in retirement]
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
I donrsquot know if I am on course to 56 37 57 59 50 39 49 48 48 41 22 68 achieve my retirement income
No I am on course to achieve around one-quarter (25) of my 10 14 9 13 15 14 14 13 10 10 10 7 retirement income
No I am on course to achieve around 12 20 14 11 19 19 18 15 12 11 23 12 half of my retirement income
No I am on course to achieve around three-quarters (75) of my 8 14 7 4 8 15 9 8 6 11 20 5 retirement income
Yes I am on course to achieve my 15 15 13 14 8 13 11 17 25 27 25 8 retirement income
CQ
CQ
39 | The Young Pragmatic and Penniless Generation
Chart 8 Young people in most countries expect to retire before 65 Q At what age do you expect to retire from all paid employment
Net
herl
ands
Ger
man
y
Swed
en
Uni
ted
Kin
gdom
Fran
ce
Spai
n
Pol
and
Hun
gary
Uni
ted
Stat
es
Cana
da
Chin
a
Japa
n
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
40 or under 0 1 1 0 0 1 3 1 5 12
41-50 1 2 3 5 2 2 6 3 9 4 37 9
51-59 4 4 4 6 2 4 11 5 7 10 30 1
60 5 11 8 12 10 13 19 12 12 16 21 27
61-64 2 11 10 2 20 7 4 13 5 3 1 2
65 17 22 44 31 34 32 16 26 26 32 3 25
66-69 42 32 15 9 12 29 20 13 9 9 0 1
70 19 11 10 18 10 5 10 9 13 12 0 6
71+ 5 5 5 9 4 5 5 3 7 5 1 4
Never 2 1 1 2 2 2 6 4 1 0 0
Donrsquot know 2 3 2 5 3 2 8 9 5 5 1 13
Mean 67 65 65 65 64 65 63 64 63 64 53 59
Median 67 65 65 65 65 65 65 65 65 65 55 60
Chart 9 Younger employees feel they donrsquot have money to invest for retirement Q What is the single biggest obstacle to you saving for retirement right now
Net
herl
ands
Ger
man
y
Swed
en
Uni
ted
Kin
gdom
Fran
ce
Spai
n
Pol
and
Hun
gary
Uni
ted
Stat
es
Cana
da
Chin
a
Japa
n
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
The uncertain economic environment 19 8 13 9 13 19 11 14 12 9 29 27
Lack of money to invest 28 41 33 43 47 34 48 55 47 50 6 19
Fear of poor investment returns over the coming years 2 5 10 7 5 6 8 2 6 8 14 6
Complexity of investment products 4 4 4 3 5 3 5 2 12 5
I donrsquot know how to go about investing for the long-term 2 3 10 8 5 5 3 3 6 8 7 9
The fees charged by financial services companies 2 4 4 2 4 3 4 2 3 5 2 5
I canrsquot afford to take financial advice 3 3 6 8 2 4 3 5 3 2 3 2
I donrsquot trust the financial services industry 12 11 8 6 5 10 6 2 2 3 5 4
I donrsquot see the need to save for the long-term 6 1 2 2 3 3 3 1 2 1 4 3
Concerns about unstable currencies currency fluctuations 2 5 1 3 3 3 4 3 4 5 15 2
Other (PLEASE STATE) 3 3 1 1 3 2 4 6 2 2 1
Donrsquot know 17 12 11 7 8 6 3 6 8 6 3 17
The Young Pragmatic and Penniless Generation | 40
Chart 10 More money would incentivize young employees to save for retirement Q Which if any of the following would encourage you to save for retirement
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsMore generous tax breaks on long-term savings and pensions 20 44 30 32 27 23 42 42 33 43 40 32 products
Ger
man
yG
erm
any
Access to financial education so that I am more aware of what 24 6 14 21 16 22 21 12 23 24 43 25 I need to do for myself
Swed
enSw
eden
Access to professional financial advice so that I have personalized
Uni
ted
20 24 23 23 15 21 25 9 22 23 44 13 U
nite
drecommendations on what steps
Kin
gdom
Kin
gdom
I need to take
Simpler investment products that 12 33 19 28 20 Fr
ance
18 27 16 32 28 36 10 Fr
ance
I can understand with less jargon
Better and more frequent information about my retirement 16 28 20 27 27 23
Spai
n20 18 25 31 45 22
Spai
nsavings
Better legal protection in case I am 12 18 13 18 10 24 18 13 13 19 21 6 P
olan
dP
olan
dsold the wrong product
A pay rise 46 54 44 64 55 50 70 72 67 64 53 37
A better retirement plan pension H
unga
ryH
unga
ry27 32 25 33 29 26 42 35 39 44 33 32 match from my employer
Other 4 2 1 1 2 2 3 3 2 U
nite
d3 0
Uni
ted
Stat
esSt
ates
Donrsquot know 17 9 16 10 10 12 3 8 8 5 3 17
Not applicable - I already have 3 3 4 2 2 1 1 1 2 2 3 sufficient savings Ca
nada
Cana
da
Chin
aCh
ina
Chart 11 A majority of younger employees do not have a written plan for retirement Q Which of the following best describes your retirement planning strategy
Japa
n Ja
pan
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
I have a written plan 7 18 10 9 6 8 6 5 13 10 8 4
I have a plan but it is not written 24 47 37 25 23 31 29 31 37 44 55 24
down
I do not have a plan 61 32 51 61 62 55 62 58 45 42 34 61
Donrsquot know 7 3 3 5 8 6 3 6 4 4 3 12
41 | The Young Pragmatic and Penniless Generation
Chart 12 For young employees friends and family are the leading source of retirement savings information Q And which of these sources (of information) is most important to you
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
Bank adviser 6 11 19 5 25 5 7 4 3 17 10 2 N
ethe
rlan
dsN
ethe
rlan
dsProfessional financial adviser 12 22 10 12 10 19 19 22 21 25 19 10
Insurance agent spokesperson 3 10 2 3 1 3 6 2 3 0 3 2 G
erm
any
Ger
man
yInsurance company website 3 1 3 2 4 4 2 2 1 3 1
Personal finance websites online 8 5 7 8 5 4 10 8 12 6 10 8 retirement planning tools Sw
eden
Swed
enPersonal finance media 2 2 2 2 2 6 3 1 2 1 6 2
Government website 7 1 3 6 U
nite
d5 2 3 3 2 3 7 1
Uni
ted
Kin
gdom
Kin
gdom
Bank website 2 3 3 2 1 0 3 2 1 6 3 3
My employer 12 8 4 9 4 7 5 12 8 5 4 1 Fr
ance
Fran
ceAccountant 2 6 4 4 1 3 1 3 5 5 1 3
Lawyer 2 3 1 2 2 8 4 2 1 2 2 0 Sp
ain
Spai
nFriends and family 21 22 30 28 24 26 18 24 26 20 25 24
None of these P
olan
dP
olan
dNot applicable 21 7 16 18 19 13 17 15 14 9 5 41
Hun
gary
Hun
gary
Chart 13 Most young workers feel their employer should provide some kind of pension Q In the future what if anything should employers do to help people plan for retirement
Uni
ted
Uni
ted
Stat
esSt
ates
Cana
daCa
nada
Chin
aCh
ina
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 Ja
pan
Japa
n Employers should be required to 24 43 20 40 21 26 20 28 37 34 20 30 contribute to workersrsquo pensions
Employers should be required to make a pension available but not to 12 13 7 17 20 15 15 4 11 14 22 5 contribute into it
Employers should not be required to provide pensions but should 15 9 12 8 9 8 11 6 11 9 9 11 provide information on how to plan for retirement
Employers should provide a range of flexible benefits and 13 18 18 16 15 27 25 28 21 22 45 12 allow individuals to choose which benefits they actually want
Nothing ndash it should be left to individual employees to take care 2 2 5 1 4 3 3 5 6 5 1 9 of themselves
Nothing ndash it should be left to the government to take care of its 2 5 5 2 5 8 15 14 1 4 0 4 citizens
Donrsquot know 30 10 32 17 27 12 12 15 13 13 3 29
The Young Pragmatic and Penniless Generation | 42
Chart 14 Workplace pensions are relatively low down in young workersrsquo priorities when choosing a job Q How important to you would the following workplace benefits be if you were choosing your next job
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsBasic salary 86 93 88 91 88 92 90 94 90 93 96 94
Holiday entitlement 87 94 89 91 92 94 91 94 93 94 96 91 G
erm
any
Ger
man
yOvertime and bonus pay 86 93 87 88 89 90 89 94 90 91 97 90
Location of workplace 88 91 86 92 89 90 89 92 93 93 92 86 Sw
eden
Swed
enMedical health insurance 73 92 84 65 86 87 88 87 93 94 98 83
Opportunities for career progression 86 91 81 90 90 94 91 94 92 91 96 81 U
nite
dU
nite
dAccess to a workplace retirement 85 85 81 82
Kin
gdom
78 84 80 78 84 86 93 74 K
ingd
omplan with employer contributions
Access to good training provision 85 87 85 88 86 91 85 93 86 90 95 74 Fr
ance
Fran
ceFlexible working hours 79 87 58 86 81 89 81 87 91 91 92 57
Life insurance 72 75 79 69 80 82 Sp
ain
84 80 81 88 93 74 Sp
ain
(death in service benefits)
Phased retirement or other employer programs providing for 74 54 75 71 72 81 76 74 76 81 91 65
Pol
and
Pol
and
a transition into retirement
Ability to work past the normal 68 57 64 65 64 74 72 65 74 76 80 70 retirement age H
unga
ryH
unga
ry
Access to a workplace retirement 62 74 61 68 59 77 61 47 68 74 89 65 plan without employer contributions U
nite
dU
nite
dSt
ates
Stat
esEmployee share plans 50 72 54 65 59 73 61 51 64 73 91 55
Access to creche help with the 67 75 64 56 69 79 75 83 58 69 89 68 cost of childcare Ca
nada
Cana
da
Opportunities for foreign travel 53 54 60 55 50 71 58 66 57 61 79 37
Company car 51 46 45 47 49 63 51 49 36 49 69 Ch
ina
39 Ch
ina
Japa
n Ja
pan
Chart 15 Young workers think the state pension will need to be reformed Q With the cost of government pensions becoming a greater concern as people live longer which if any of the following do you think
the government should undertake
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
The government should reduce the overall cost of state pension 15 33 16 15 16 20 28 22 21 26 30 16 provision by reducing the value of individual pension plans
The government should increase overall funding available for the 12 21 30 22 14 34 19 26 21 18 29 10 state pension through raising taxes
43 | The Young Pragmatic and Penniless Generation
he government should take a alanced approach with some 27 26 12 30 28 23 24 16 34 31 38 41 eductions in individual payments nd some increases in tax
he government should not do nything State pension provision 7 2 12 5 3 4 3 3 5 4 0 5 ill remain perfectly affordable in he future
onrsquot know 38 19 29 29 39 20 26 34 19 21 4 28
Net
herl
ands
art 16 Products which protect against investment risk are the most important to young workers ( interested) Thinking about the types of financial products you could purchase to help provide you with security in retirement on a scale of 1 to 5
how interested are you in the following options G
erm
any
Swed
en
Uni
ted
Kin
gdom
ase 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 Fr
ance
100 100 100 100 100 100 100 100 100 100 100 100
product providing a guaranteed etirement income stream or 75 81 73 76 74 83 78 76 87 85 94 69
Spai
nifetime income in retirement
product which protects my 74 79 73 76 72 82 77 74 84 86 94 65 etirement income against inflation P
olan
d
product which guarantees that I 72 82 73 78 75 81 76 73 86 86 90 67 onrsquot lose my initial investment H
unga
ry product which helps meet the ost of long-term care if I become 74 79 74 77 70 79 76 71 86 85 84 66
Uni
ted
nable to look after myself St
ates
product which protects my capital 71 81 71 76 68 76 77 73 84 83 93 65 rom poor investment returns Ca
nada
product which generates a etirement income and allows 69 78 71 75 68 81 77 72 84 86 94 70 e to take a lump sum from the
Chin
anvestment should I need to
product where the annual 66 78 68 75 72 79 77 70 85 86 87 64 anagement charges are kept low Ja
pan
product which enables me to eep some control over how my 71 73 70 75 72 80 75 69 88 85 91 63 avings are invested during my etirement
product which manages the sset allocation so that I am never 68 70 67 73 66 76 71 67 80 83 95 60 xposed to a level of risk Irsquom not omfortable with
product which continues to rovide a retirement income to my 74 78 71 75 73 81 79 73 86 82 94 60 pouse in the event that I die first
product which protects my family gainst having to pay estate taxes 73 76 71 74 75 81 75 69 82 82 89 56 hen I die
product which locks in investment 72 71 63 73 64 71 59 56 81 84 89 61 eturns during the good years
Tbra
Tawt
D
ChQ
B
Arl
Ar
Ad
Acu
Af
Armi
Am
Aksr
Aaec
Aps
Aaw
Ar
The Young Pragmatic and Penniless Generation | 44
13
4
16
3
Chart 2 Youth unemployment in 2005 and 2012 across Aegon survey countries (excluding China)
60 1
24
14
3
2005 2
06
2012
23
8
45
15
2
81
19
4
30 2
81
86
79
15 9
4
95
37
8
0 2
65
y
Japan
Spain
19
7
Canad
a
Fran
ce
Poland
Germ
any
Hunga
r
Sweden
OECD tota
l
Nether
lands
53
2
United S
tate
s
United K
ingdom
22
Note Youth unemployment rate of youth labour force (age 15 - 24) vi
23
7
12
2
21
11
3
16
2
The problems of high levels of youth unemployment and economic uncertainty affect those with jobs as well as those without
as they breed lower levels of job security and downward pressure on wages They also have a significant impact on the psychology and
confidence of younger people including those in work and their confidence in their short-term and retirement finances As the survey
findings reveal most young employees expect to find themselves worse off than their parentsrsquo generation when they enter retirement
(Chart 3)
Chart 3 The majority of young employees believe that they will be worse off in retirement compared to their parents Q Do you think that future generations of retirees will be better off or worse off than those currently in retirement
Base 20-29 year olds
Donrsquot knowBetter off
8 13
Total Respondents
2722
20 About
the same
59
Worse off
9 | The Young Pragmatic and Penniless Generation
Another major influence on the ability of young employees to save for retirement is the growth of higher education One positive
is that college graduates are more likely to benefit from lower unemployment rates fare better during economic downturns and
experience higher incomes across their lifetime supporting aspirations like home ownership vii and helping to sustain long-term
savings and increased levels of retirement preparedness (Chart 4)
Chart 4 Graduates are likely to enjoy a greater sense of retirement preparedness Q Thinking about how much you are putting aside to fund your retirement are you saving enough
Base All lsquovery prepared for retirementrsquo
30 27
17 16Postgraduate degree or qualification
College degree University degree Some college or trade school
8 High school graduate
1 Below high school graduate Other
Conversely full-time education delays entry into the labor Why is this group of young employees important arket causing a loss of several years of full-time earnings By the middle of the century todayrsquos 20-29 year olds will
otential Moreover ballooning levels of student debt may have led the world economy through an economic recovery
ignificantly delay the onset of post-graduation saving and dramatic demographic shifts during a period of greater
etween 2004 and 2012 for example student debt in the uncertainty for modern retirement systems and other issues
nited States tripled to $966 billion nationwide The effect In developing countries such as China this group will be more
f this is that todayrsquos younger employees must take greater affluent than their parents but still need to deal with the
ersonal responsibility for their savings a challenge in the consequences of a rapidly aging population and an economy
urrent economic and financial circumstances which has passed its phase of rapid growth
For all of their challenges however this group of young people
represents the biggest opportunity to change societal savings
behaviors for the better The Aegon Retirement Readiness Survey
2013 provides insights into how best to achieve this through a
greater understanding of the grouprsquos outlooks and savings habits
m
p
s
B
U
o
p
c
The Young Pragmatic and Penniless Generation | 10
45
29
20
6
50
24
21
6
56
19
21
4
46
27
21
6
Better off About the same
Worse off Donrsquot know
All work
ers
20-29 ye
ar old
s
Male 2
0-29 ye
ar old
s
Fem
ale 2
0-29 ye
ar old
s
Chinarsquos young employees bucking the gloomy trend optimistic that their economy will continue to expand over
A key finding of this yearrsquos Aegon Retirement Readiness the next 30 years Concerns about the sustainability of
Survey is that Chinese employees are far more confident growth remain however Just 37 of Chinese 20-29 year
and optimistic about their financial future than employees olds believe that the Chinese economy will improve over
in other countries This is also true of younger employees the next 12 months ndash indeed 2013 will see the economyrsquos
Of those Chinese aged 20-29 half (50) believe that they slowest expansion since 1990 x Long term Chinarsquos rapidly
will be better off in retirement than those currently in aging population makes creating a comprehensive and
retirement Younger Chinese men are the most optimistic sound retirement system an urgent priority xi Coverage has
with 56 believing that they will be better off expanded in the past 10 years with reforms such as the
introduction of the Enterprise Annuity in 2005 yet it is still
This optimism is relatively justified Since 1980 Chinese GDP not clear how China will build a universal retirement system
per capita has increased thirty-fold from $193 to $6091 across both the government-sponsored and private sectors
in 2012 viii While this dramatic increase has not benefitted However the success of reforms carried out to date suggests
all Chinese equally ndash by the Chinese governmentrsquos measure that tax incentives and efforts to improve awareness are
99 million rural Chinese live in poverty ix ndash huge progress required as part of any long term solution
has been made and young people in China are generally
Chart 5 Chinarsquos younger employees are confident of a better retirement Q Do you think that future generations of retirees will be better off or worse off than those currently in retirement
Base Respondents in China
11 | The Young Pragmatic and Penniless Generation
Part 2 The savings outlook of young employees This chapter explores the financial behaviors and savings gaps and needs of 20-29 year olds through their attitudes toward financial issues the wider economy and the savings required for a comfortable retirement
The Young Pragmatic and Penniless Generation | 12
75
21
4
69
27
4
64
31
4 5
7
36
7
20-29
30-39
40-49
50-59
44
40
16
NET Low Index (0-5)
NET Medium Index (6-7)
NET High Index (8-10)
60-69
Retirement readiness and young employees However many young employees have concerns about achieving
Retirement is seen as a major life stage by young employees this Over a third (38) are pessimistic that they will not have
They typically expect to spend an average 20 years of their lives enough to live on in retirement and 44 are pessimistic about
in retirement a definition of retirement that is consistent across being able to choose when they retire Furthermore 28 have
all working age groups Retirement conjures broadly positive made no plans at all for their retirement which may help explain
associations Fully 63 of employees in their twenties aspire some of these concerns Health worries are less of an issue with
to travel during retirement 39 see it as a period of leisure 52 being optimistic that they will enjoy good health in old age
and 30 associate it with freedom The need to plan and save although 20 believe that they will not which is perhaps related
for this phase of life is also widely accepted Half (50) of to the 17 who associate retirement with ill health in general
employees in their twenties are aware of the need to save and
64 feel a high or very high degree of personal responsibility Overall 75 of employees in their twenties achieved a low
to ensure sufficient income for retirement retirement readiness score of 0-5 on the Aegon Retirement
Readiness Index (please refer to the glossary and Appendix 1 for
an explanation of the Index) The percentage of employees with a
low score of 0-5 drops with each increase in age group and is 44
among those in the lsquoat retirementrsquo group of 60 to 69 year olds
Chart 6 Aegon Retirement Readiness Index scores for employees across age groups For more information on the ARRI see page 36
Base All aged 20 - 69
Life stage and savings attitudes Getting married and starting a family are two such events
he Retirement Readiness Index reveals that retirement Of employees in their twenties 25 are married and
reparedness is to some extent age- and life stage-related 25 have children whereas for those in their 30s 54 are
hart 6) For younger employees the idea that retirement is married and 56 have children representing a major shift
r awayrsquo combined with lower earnings and other spending toward parenthood
riorities (such as higher education or purchasing a house)
an be powerful obstacles to saving for retirement Thus while Encouragingly while young employees are less likely to
5 of all employees say that they lsquoalways make surersquo that they have started saving for retirement many see themselves as
re saving for retirement just 25 of 20-29 year olds do so future lsquoaspiringrsquo savers Fully 41 intend to save in the future
t present over half (57) of 20-29 year olds are not saving compared to 27 of all employees and only 7 do not intend
r retirement compared to 46 of all employed adults to save for retirement This large group of aspiring savers
ven in China where 44 are always saving for retirement who are committed to the idea of putting money aside for
st 32 of 20-29 year olds do so retirement challenges the view that young people are unwilling
to save Furthermore since converting these young employees
his life cycle effect can be seen in numerous ways At the from aspiring savers to regular savers may depend on the
utset of adult life employees experience lower income and right economic conditions and appropriate financial incentives
igher spending as they prioritize and fund life events with a helping them is a major opportunity for governments and
ignificant impact on their ability or desire to save for retirement employers
T
p
(C
lsquofa
p
c
3
a
A
fo
E
ju
T
o
h
s
13 | The Young Pragmatic and Penniless Generation
35 25 20 19 12 9 27 41 7 7
I always make sure I only save for I am not saving for I am not saving for I have never saved that I am saving retirement occasionally retirement now although retirement though for retirement and for retirement from time to time I have in the past I do intend to donrsquot intend to
All 20 to 29 year olds
NET Low Index (0-5)
NET Medium Index (6-7)
NET High Index (8-10)
Chart 7 Younger employees are much more likely to aspire to save for retirement but the majority are not saving Q Which of the following best explains your approach to saving for retirement This can include money you contribute to any
long-term investment including pensions stocks and shares investment-linked insurances property etc
Other findings support the assertion that younger savers This can be seen in Chart 8 More 20-29 year olds claim that
are open to increasing their retirement savings Over a third they are not likely to be saving for retirement by any means
(37) of 20-29 year olds feel lsquovery responsiblersquo for ensuring (17 against 12 for all adults) and are generally less likely
a sufficient retirement income Note however that this does to use any of the savings products mentioned Revealingly
not translate into better developed financial plans and savings 20-29 year olds are far less likely to name lsquogovernment benefits
strategies Only 7 in this age group feel they have lsquowell in retirementrsquo as a source of retirement income although almost
developedrsquo personal retirement plans and 33 say they are all respondents have some such entitlement This may be due
lsquohardly saving anythingrsquo for retirement Clearly awareness of the to unawareness of government benefits and or greater
retirement situation does not translate into actual retirement scepticism about governmentsrsquo ability or willingness to
planning activity provide for them in old age
The Young Pragmatic and Penniless Generation | 14
Chart 8 Younger people are more likely not to be using any means of retirement savings Q Which financial means if any are you currently using to prepare for your retirement
33 Savings accounts 31
36 Government pension social security 24
25 Defined benefit plan 21
22 Private pension 17
23 Defined contribution plan 15
20 Life insurance 15
14 Stocks 10
14 My home 9
12 Mutual funds 8
9 Inheritance 7
9 Bonds 7
8 Investment property 7
5 Employee stock purchase 5
5 Investment insurances (annuities) 4
4 Long-term care insurance 4
6 Annuities 3
My business 2 3
Reverse mortgage 1 1
Other 3 2
12 None nothing 17
6 Donrsquot know 10
All 20 to 29 year olds
Leisure
Freedom
Far away
Insecurity
Enjoyment
Poverty
Ill health
Boredom
Opportunity
Dependent on others
Loneliness
Tired
Excitement
None of the above
Donrsquot know
Retirement associations What does the younger generation feel about retirement and want to get out of it Perhaps unsurprisingly 20-29 year olds are more
likely to be negative than older respondents associating retirement with boredom loneliness and ill health They are also far more
likely to believe retirement is lsquofar awayrsquo which is likely to be a barrier to retirement saving
15 | The Young Pragmatic and Penniless Generation
Chart 9 The younger generation has more negative associations with retirement Q Which if any of the following words do you most associate with retirement
44 Leisure 39
36 Freedom 30
17 Far away 26
25 Insecurity 25
25 Enjoyment 21
19 Poverty 19
15 Ill health 17
9 Boredom
13
16 Opportunity
13
10 Dependent on others
12
9 Loneliness
11
0
r olds
7Tired
1
6Excitement
6
2None of the above
1
2Donrsquot know 2
All 20 to 29 yea
Aspirations and responsibilities for retirement Income levels in retirement ung people have similar retirement aspirations to the general A high proportion (47) do not know if they are on course
pulation for example travel (63) spending time with to achieve their retirement income goal Combined with the
iends and family (61) and pursuing new hobbies (52) high level of financial responsibility young employees expect
r them however retirement also includes the responsibility of to assume in retirement it is clear that people not only need
ring for others Two-fifths (40) believe that lsquoadult children to build much greater awareness of what kind of financial
retirees should help through providing financial support to pressures they are likely to face in retirement but also require
eir parents if neededrsquo and 28 believe that this will affect greater support in establishing realistic retirement income
em directly in retirement through providing financial support targets which are capable of meeting their needs
their parents A fifth (21) also expect to spend some of
eir retirement caring for other family members while just
donrsquot expect to provide for anyone compared to 40 of all
ployees Clearly todayrsquos young employees anticipate serious
ancial responsibilities in their retirement
Yo
po
fr
Fo
ca
of
th
th
to
th
30
em
fin
The Young Pragmatic and Penniless Generation | 16
Chart 10 Many young employees do not think that they are on course to achieve target retirement income Q Do you think you will achieve this income [your estimated income needed in retirement]
Base 20-29 year olds
Yes I am on course to achieve my retirement
income
16
47
12
16
10
I donrsquot know if I am on course to achieve my
retirement income
No I am on course to achieve around
one-quarter (25) of
No I am on course to achieve around half of my
retirement income
No I am on course to achieve around
three-quarters (75) of my retirement income
532
China
586
Japan
United S
tate
s
628
Poland
635
Canad
a
636
Hunga
r
638
y
Fran
ce
645 647
Spain
Sweden
649
United K
ingdom
651
Germ
any
653
Nether
lands
666
my retirement income
When will young people retire Media reports about the need to raise the age of retirement appear to have influenced younger employees Fully 44 of 20-29 year
olds do not expect to be able to choose their retirement date although the younger generation do expect to retire at a similar age
to older employees 63 This varies considerable by country In the Netherlands young employees expect to retire eight years later
than those in Japan Some countries such as China and Japan have surprisingly low expected retirement ages suggesting that young
employees may benefit from having a better understanding of when government or workplace retirement benefits kick in
Chart 11 Young people in most countries expect to retire before 65 Q At what age do you expect to retire from all paid employment
Base 20-29 year olds
Despite expecting to retire at the same age as their parents younger employees are more open to a transition into retirement
reflecting their more flexible outlook toward work Around half (51) are happy to change the way they work in some way as they move
into retirement Just 8 expect to keep working as they do currently
17 | The Young Pragmatic and Penniless Generation
Part 3 What is holding young employees back Insights into what young employees feel is holding them back from saving or saving more can be used to encourage younger people to adopt more positive savings behaviors This chapter explores the attitudes of young employees toward the financial obstacles they face and asks what actions they have taken in preparation for retirement The findings reveal that while the majority lacks adequate planning for their retirement needs financial shortcomings are only part of the stor y Spending preferences play a key role in the savings gap of advanced economies
The Young Pragmatic and Penniless Generation | 18
Lack of money to invest 37
16 The uncertain economic environment
7 Fear of poor investment returns over the coming years
6 I donrsquot trust the financial services industry
6 I donrsquot know how to go about investing for the long-term
4 oncerns about unstable currencies currency fluctuations
4 Complexity of investment products
4 I canrsquot afford to take financial advice
3 The fees charged by financial services companies
3 I donrsquot see the need to save for the long-term
Other 2
Donrsquot know 8
A pay rise
More generous tax breaks on long-term savings and pensions products
A better retirement plan pension match from my employer
Better and more frequent information about my retirement savings
Simpler investment products that I can understand with less jargon
Access to professional financial advice so that I have personalized recommendations on what steps I need to take
Access to financial education so that I am more aware of what I need to do for myself
Better legal protection in case I am sold the wrong product
Other
Not applicable - I already have sufficient savings
Donrsquot know
Obstacles and incentives to saving
Chart 12 Younger employees feel they donrsquot have money to invest for retirement Q What is the single biggest obstacle to you saving for retirement right now
Base 20-29 year olds
C
What is the single biggest obstacle preventing twentysomethings that they rank pressing and desirable life goals such as marriage
m saving for retirement Not having enough money to invest starting a family vacations and other leisure activities above the
top of the list cited by over a third (37) although this figure need to plan for retirement This suggests the savings gap is
ops to just 6 in the emerging market of China where mean preference-driven
omes are the lowest by far ($18000) suggesting that lack of
sh may be partly a state of mind Young employees in China The biggest obstacle to retirement savings cited by one-eighth
actually more worried about local concerns such as economic (13) of respondents is either not knowing how to invest for the
certainty (29) and currency instability (15) Behavioral long-term or the complexity of investment products charges and
ance has an impact too with the way young employees frame fees Ready solutions to this include improving young employeesrsquo
eir financial priorities creating its own obstacles to saving financial literacy about retirement planning and creating easier
many as 57 of 20-29 year olds believe that saving for access to professional financial advice
tirement is important but not a current priority suggesting
fro
is
dr
inc
ca
are
un
fin
th
As
re
19 | The Young Pragmatic and Penniless Generation
Chart 13 More money would incentivize young employees to save for retirement Q Which if any of the following would encourage you to save for retirement
Base 20-29 year olds
57 A pay rise
More generous tax breaks on long-term savings and pensions products
34
A better retirement plan pension match from my employer
33
Better and more frequent information about my retirement savings 26
Simpler investment products that I can understand with less jargon 24
Access to professional financial advice so that I have personalized recommendations on what steps I need to take 23
Access to financial education so that I am more aware of what I need to do for myself 22
Better legal protection in case I am sold the wrong product 16
Other 2
Not applicable - I already have sufficient savings 2
Donrsquot know 10
Chart 14 Very few younger employees have a written plan for retirement Q Which of the following best describes your retirement planning strategy
Base 20-29 year olds
5 Donrsquot know I have a
written plan
8
34 I have a plan but it is not
52 written down
I do not have a plan
Turning to incentives greater remuneration predictably tops a list Retirement planning of what would encourage 20-29 year olds to save for retirement Retirement planning is essential to adequate retirement saving
More tellingly a third (33) would like their employer to provide although it is somewhat lacking in todayrsquos younger employees
a better retirement plan into which both parties contribute Over half (52) have no retirement planning strategy at all
Better information and simple products would also help more and only 8 have noted down their retirement strategy
people to save A quarter (26) would be encouraged to save by
better and more frequent information about retirement savings Nevertheless the respondents polled believe that the current
while a similar number (24) want simple investment products global economy makes retirement planning increasingly
that are easy to understand As with the previous question a important ndash 71 agreed with this statement It is clear from this
lack of investment knowledge and the complexity of investment that young people between the ages of 20 and 29 do not lack
products are revealed as obstacles to savings the will to save they lack the opportunity
The Young Pragmatic and Penniless Generation | 20
Part 4 Creating the right conditions for young employees to save How may young employeesrsquo obstacles to saving be overcome For retirement readiness this will be a defining question of the early twenty-first centur y ndash and an extremely challenging one given the number of serious issues affecting younger employeesrsquo finances What was learned in the previous chapter about encouraging young employees to save is a start This chapter examines which areas and triggers to saving can be unlocked and whether government employer or individual should take most responsibility
21 | The Young Pragmatic and Penniless Generation
Friends and family
Professional financial adviser
17
24
Bank adviser 9
Personal finance websites online retirement planning tools
My employer
Government website
4
8
7
Insurance agent spokesperson
Accountant
3
3
Personal finance media 3
Lawyer
Bank website
3
2
Insurance company website
Donrsquot know
2
15
Information and advice on retirement saving strong theme revealed by our findings is that younger This finding is remarkably consistent across the countries
mployees want more information on savings products and sur veyed despite significant differences in market makeup
etter access to advice The largest share 24 (compared although some differences exist For instance a quar ter
o 17 for all employees) finds friends and family to be the (25) of young employees in France turn to bank advisers
ost important source of advice followed by professional for financial information nearly triple the number among all
dvisers (17) and bank advisers (9) That young employees young people (9)
urn to friends and family first suggests an unmet need for
rofessional financial advice This is both a challenge and an
pportunity for the financial ser vices sector
hart 15 For young employees friends and family are the leading source of retirement savings information Which of these sources (of information) is most important to you
ase 20-29 year olds
A
e
b
t
m
a
t
p
o
CQ
B
What is the role of the workplace in retirement planning Does this influence what retirement benefits younger
In response to shifting employment patterns todayrsquos younger employees expect from their workplace Certainly a majority
employees are less loyal to their employers than older workers favor workplace retirement plans with 61 believing that these
Fully 39 of 20-29 year olds are planning to look for a new job should be a fundamental part of pay (although this is lower
in the next 12 months compared to 29 of all workers and than for employees overall) and just 4 feel that retirement
31 frequently think about quitting their jobs Strikingly while planning should be left entirely to individuals
53 of all workers plan to stay with their current employer
until retirement just 37 of 20-29 year olds say this However there is evidence of a slight shift in perceptions
Younger workers are less likely to want workplace retirement
Doubtless much of this is because younger workers are more plans over other factors Of those who want employer
mobile and have more opportunities Another trigger to lower retirement plan contributions only 46 wanted this even if
employer loyalty may be the expectation of holding more jobs it reduced benefits and 35 (compared to 43 of all workers)
and even pursuing multiple careers over a working lifetime if it cut jobs
The Young Pragmatic and Penniless Generation | 22
Donrsquot know Employers should be
required to contribute to workersrsquo pensions
5 Nothing ndash it should be left to the government to take 18
care of its citizens 28
4 Nothing ndash it should be left to individual employees to
take care of themselves
13
22
Employers should provide a range of flexible benefits
and allow individuals to choose which benefits they
actually want
10 Employers should
be required to make a pension available but not
to contribute into it
Employers should not be required to provide pensions but should
provide information on how to plan for retirement
Chart 16 Most young workers feel that their employer should provide some kind of pension Q In the future what if anything should employers do to help people plan for retirement
Base 20-29 year olds
Are other workplace benefits more important Younger workers were asked to rate the importance of various workplace benefits The results reveal how highly they value the
elements of their compensation package Chart 17 shows that 87 of young employees believe a workplace retirement plan with
employer contributions would be an important factor when choosing their next job While retirement may be decades away for
twentysomethings 80 believe programs provide for a phased retirement are important
23 | The Young Pragmatic and Penniless Generation
Basic salary 94
93 Holiday entitlement
91 Overtime and bonus pay
91 Location of workplace
88 Medical health insurance
87 Opportunities for career progression
Access to a workplace retirement plan with employer contributions 87
Access to good training provision 86
Flexible working hours 85
Life insurance (death in service benefits) 81
Phased retirement or other employer programs providing for a transition into retirement 80
Ability to work past the normal retirement age 70
Access to a workplace retirement plan without employer contributions
67
Employee stock plans 65
Access to creche help with the cost of childcare 59
Opportunities for foreign travel 50
Company car 43
Chart 17 Workplace retirement plans are a relatively low priority for younger workers when choosing a job How important to you would the following workplace benefits be if you were choosing your next job
ase 20-29 year olds
Q
B
Regarding workplace benefits provided by employers today considered just enough to fulfill basic needs and in China a
young employees are about as likely as all workers to be offered fully formed nationwide retirement system is still some way off
retirement tools such as annual plan statements and online The future shape and affordability of these plans is debated in
tools from their employer though it is concerning that 24 do all of the sur vey countries to var ying degrees
not know if such tools are available or not Those provided are
considered helpful Younger workersrsquo views on reform are important because
changes to government retirement benefits are more likely
The role of government to affect them than any other part of the working population
The generosity of government retirement benefits varies The main concern cited by 57 is of facing less generous
considerably in the countries sur veyed In some countries such government retirement benefits than those enjoyed by their
as France government benefits are the primar y mechanism parentsrsquo generation
for funding retirement while in the United Kingdom they are
The Young Pragmatic and Penniless Generation | 24
The government should reduce the overall cost of state pension provision by
reducing the value of Donrsquot know individual pension plans
25 22
4 The government should not do anything State pension provision will
remain perfectly affordable in the future
28
21 The government should increase overall funding
available for the state pension through
raising taxes
The government should take a balanced approach with some reductions in individual payments and
some increases in tax
Chart 18 Young workers think that the government retirement system will need to be reformed Q With the cost of government retirement benefits becoming a greater concern as people live longer which
if any of the following do you think the government should undertake
Base 20-29 year olds
The younger generation believes that the government cannot What do young employees look for in a retirement product continue to provide as it does now ndash just 4 think government The sur vey findings show that young employees have
benefits will remain affordable to society However there is no reser vations about employer and government retirement
consensus on what governments should do to reform retirement benefits So what then do they want from a private savings
plan systems Over a fifth (22) think retirement entitlements product The savings product feature most valued by younger
should be cut just over a fifth (21) think governments should workers is protection against investment risk (Char t 19)
raise taxes and more than a quarter (28) think a mixture of This may be in the form of no loss of initial investment a
the two is the best solution Another quarter admits that they guaranteed income stream or protection against inflation
donrsquot know what should be done This is reasonable ndash the initial investment of those farthest
from retirement is most at risk However less consideration
is given to savings grow th through investment returns This
suggests that there is an oppor tunity to educate young
workers about the trade-off between returns and risk
management and what they stand to gain
25 | The Young Pragmatic and Penniless Generation
Chart 19 Products which protect against investment risk are the most important to young workers ( interested) Q Thinking about the types of financial products you could purchase to help provide you with security in retirement on a scale of 1 to 5
how interested are you in the following options
Base 20-29 year olds
A product providing a guaranteed retirement income stream or lifetime income in retirement 82
A product which protects my retirement income against inflation 81
A product which guarantees that I donrsquot lose my initial investment 81
A product which helps meet the cost of long-term care if I become unable to look after myself 80
A product which protects my capital from poor investment returns 79
A product which generates a retirement income and allows me to take a lump sum from the investment should I need to 79
A product where the annual management charges are kept low 78
A product which enables me to keep some control over how my savings are invested during my retirement 77
A product which manages the asset allocation so that I am never exposed to a level of risk Irsquom not comfortable with 76
A product which continues to provide a retirement income to my spouse in the event that I die first 75
A product which protects my family against having to pay estate taxes when I die 72
A product which locks in investment returns during the good years 70
The lsquodefined ambitionrsquo retirement system in This removes some of the disadvantages of leaving
the Netherlands a sustainable retirement solution retirement liabilities exclusively up to employers
for young workers (defined benefit) or employees (defined contribution)
In the Netherlands as elsewhere young workers are faced In the Netherlands this is likely to involve legislation which
with an increasing retirement age decreasing government lets retirement funds automatically adjust pay-outs and
suppor t for retirement and declining traditional defined retirement age as life expectancy changes xii
benefit employer retirement plans Reforms proposed
by the Dutch may show a way for ward for all mature and This model has garnered interest elsewhere In the
aging economies United Kingdom Pensions Minister Steve Webb expressed
interest on a more limited scale with a government
rsquoDefined ambitionrsquo proposes that risks are not taken on fully guarantee for a minimum rate of return for defined
by either employer or employee but are shared contribution retirement plans
The Young Pragmatic and Penniless Generation | 26
Recommendations Enabling young workers to save The studyrsquos findings reveal that the majority of young workers (66) are either saving consistently or aspire to start saving but face challenges including debt low pay and funding for significant life events and generational changes to the economic landscape and government and employer support If young people are to achieve a prosperous retirement their willingness to save should be met with better opportunities to save Here is what can be done by employers governments and young people themselves to address retirement planning concerns for younger adults
27 | The Young Pragmatic and Penniless Generation
Individuals Employers and governments
Determine how much income you need in retirement Auto-enroll employees into a workplace retirement plan Young people accept the need to save for retirement but donrsquot If an auto-enrollment workplace retirement plan is feasible
know how to act on that need They can become more retirement this can play a major role in getting young workers saving early
savvy simply by talking to friends and family (as do 24 of and regularly Combined with auto-escalation (the automatic
our respondents already) or employers going online to use annual increase in retirement plan contributions) and matching
retirement calculators or reading the personal finance media contributions it can lead to greater retirement readiness
Seek out a financial advisor Provide more flexible savings products through the workplace Young people are faced with life events that make it easy to Not all savings journeys start with a retirement plan particularly
feel overwhelmed by financial priorities in addition to retirement for young people who may think of retirement as lsquotoo far awayrsquo
planning Soliciting advice from a finance professional early in Employers can kick-start the savings habit in younger workers
life (17 of young employees have done so already) helps with by providing flexible easy to access and easy to understand
planning and priorities and making sense of long-term finances savings plans as a more attractive starter option
Start saving now and save consistently Make company retirement plans more portable As with all employees young people will strengthen their Young people move jobs much more often than previous
retirement readiness simply by saving regularly Today only 25 generations of employees so savings like DC retirement plans
of young people always save yet even small regular amounts need to follow employees when they change jobs
will improve retirement readiness over time
Make tax incentives more effective Ask your employer about workplace retirement savings plans All countries encourage long-term savings through tax relief but
and other retirement benefits young people often arenrsquot aware of this or donrsquot understand it
While one third (33) of young people believe that a workplace A more targeted system of tax relief could help provide clearer
retirement savings plan provides a major opportunity to start and simpler signals to younger people about the financial
saving employers often experience difficulties in engaging benefits of long-term saving
younger employees in discussions about retirement planning
The workplace is an important channel for achieving retirement Make better financial education central to the workplace readiness so be sure to max out on any employer contributions retirement offer
Young people who aspire to save may be prevented from
doing so by setting the wrong financial priorities Workplace
retirement education ndash alongside professional advice ndash can help
guide young people toward the right long-term priorities at an
earlier age in life
The Young Pragmatic and Penniless Generation | 28
29 | The Young Pragmatic and Penniless Generation
Glossary
Aegon Retirement Readiness Index (ARRI) c areer average retirement plan The ARRI assesses the relative levels of retirement A type of defined benefit plan that is based on an
preparedness of employees across different countries on a employeersquos average retirement earnings over the duration
scale from 1 to 10 The Index is based on three questions of plan membership Same as average salary plan
covering attitudes and three questions covering behaviors
defined ambition (DA) plan average salary plan A type of retirement plan in which retirement plan risks
A type of defined benefit plan that is based on an are shared between the employer and the employee
employeersquos average retirement earnings over the duration It offers greater certainty to savers around the final value
of plan membership Same as career average plan of their retirement assets than in DC plans and less
cost volatility for employers than with DB plans In the
a nnuity Netherlands Defined Ambition (DA) retirement plans are
A form of contract sold by life insurance companies that being introduced in order to help relieve the pressure on
guarantees a fixed or variable payment to the annuitant employers while still trying to provide employees with a
at some future time usually retirement All capital in the more secure retirement plan The United Kingdom too is
annuity grows tax-deferred looking at DA retirement plans as a solution
auto enrollment defined benefit (DB) plan An employer-sponsored retirement plan in which the An employer-sponsored retirement plan where the amount
employer is able to enroll an employee without that of future benefits an employee will receive from the plan is
employeersquos express authorization The employer determines defined typically by a formula based on salary history and
what percentage of the employeersquos salary or wages is years of service The amount of contributions the employer
contributed to the plan The employee is able to change is required to make will depend on the investment returns
this percentage and can opt out of enrollment in the plan experienced by the plan and the benefits promised
Contrast defined contribution plan
a uto-escalation A feature of a plan which automatically increases the defined contribution (DC) plan percentage of (retirement) funds saved from salary An employer-sponsored retirement plan such as a 401(k)
This feature generally uses a default or standard plan or a 403(b) plan in the United States in which
contribution escalation rate contributions are made to individual participant accounts
Depending on the type of DC plan contributions may be
B aby Boomers made by the employee the employer or both
A term used to refer to people generally born between
the end of World War II in 1945 and the mid 1960s The employeersquos benefits at retirement or termination of
Other generations Silent Generation - the generation born employment are based on the employee and employer
between 1925 and 1945 Generation X - the generation contributions and earnings and losses on those
born between 1965 and 1979 Millennials or Generation contributions See also 401(k) and 403(b) plan
Y - the generation born between 1980 and 2000 and often Contrast defined benefit plan
classified as the children of Baby Boomers
The Young Pragmatic and Penniless Generation | 30
401(k) plan An employer sponsored retirement plan that enables
employees to make tax-deferred contributions from their
salaries to the plan
403(b) plan An employer-sponsored defined contribution plan that
enables employees of universities public schools and
non-profit organizations to make tax-deferred contributions
from their salaries to the plan
final salary plan A type of defined benefit plan in which retirement
benefits are based on final retirement salary in the years
immediately before retirement benefits are received
Millennials A term used to refer to the people born from about 1980
to 2000 brought up using digital technology They are
often classified as the children of Baby Boomers
r etirement (or pension) plan Provides replacement for salary when a person is no
longer working due to retirement In the case of a defined
benefit retirement plan the employer or union contributes
to the plan which pays a predetermined benefit for the
rest of the employeersquos life based on length of service and
salary Payments may be made either directly or through
an annuity Retirement plan payments are taxable income
to recipients in the year received The employer or union
has fiduciary responsibility to invest the retirement plan
funds in stocks bonds real estate and other assets earn
a satisfactory rate of return and make payments to retired
workers Retirement plan funds holding trillions of dollars
are one of the largest investment forces in the stock
bond and real estate markets If the employer defaults in
the United States retirement plan payments are usually
guaranteed by the Pension Benefit Guaranty Corporation
(PBGC)
variable annuities (VA) An insurance contract in which the insurance company
guarantees a minimum payment at the end of the
accumulation period The payments may vary depending
on the financial performance of the managed portfolio
31 | The Young Pragmatic and Penniless Generation
About Aegon Transamerica Center for Retirement Studiesreg and Cicero Consulting
Aegon Transamerica Center Aegon is an international life insurance pensions and asset reg management company with businesses in over 20 markets for Retirement Studies in the Americas Europe and Asia Aegon companies employ The Transamerica Center for Retirement Studiesreg (TCRS) is
around 24000 people and serve millions of customers a division of the Transamerica Institute a nonprofit private
worldwide foundation TCRS is dedicated to educating the public on
wwwaegoncom emerging trends surrounding retirement security in the
United States TCRSrsquo research emphasizes employer-sponsored
In 2010 Aegon became a founding member of the Global retirement plans issues faced by small to mid-sized companies
Coalition on Aging which seeks to raise awareness of aging and their employees and the implications of legislative and
issues among policymakers and the general public A major aim regulatory changes Transamerica Institute is funded by
of the coalition is to transform the way we think and speak contributions from Transamerica Life Insurance Company and
about aging replacing the familiar rhetoric of lsquoproblemsrsquo with its affiliates and may receive funds from unaffiliated third-
a more positive discussion of lsquopossibilitiesrsquo and lsquoopportunitiesrsquo parties For more information about TCRS please refer to
wwwglobalcoalitiononagingcom wwwtransamericacenterorg
Cicero Consulting A leading consultancy firm serving the banking insurance and
asset management sector Cicero specializes in public policy
and communications consulting as well as global thought
leadership and independent market research Cicero was
established in 2001 and now operates from offices in London
Brussels Washington and Singapore As a market leader in
pensions and retirement research Cicero designed
and analyzed the research and contributed to the report
wwwcicero-groupcom
The Young Pragmatic and Penniless Generation | 32
Marta acebo Mark Green Patricia Plas
Paula alvarez douGlas henck scott roane
Frits bart wendel hoFMan thurstan robinson
Grace basile
lynette belFry
andrew berwick
Frans van der horst
tatsuo kai
herMan kaPPelle
Patti rowey
sarah russell
Joost van schaGen
robin boon Gaacutebor kePecs dick schiethart
bert-JaaP brons Marco keiM erik schouten
douG brooks
libby buet
kent callahan
JaiMe kirkPatrick
bas knol
roGer koch
anGela seyMour Jackson
kate sMith
renske stoker
Jeanne de cervens
dana chen
Peter kunkel
alexander kuiPers
eyleen sun
MartiJn tans
arkadiusz chMurzynski
heidi cho
brian lewis
Mike linder
GreG tucker
Mark twiGG
siMon clow siMon luke catherine wanG
robert colliGnon Jason Ma Marc van weede
catherine collinson GrzeGorz Mathea tiM willaert
wendy daniels
Michel denizot
edit drevenka
Paul Middleton
takaoh MiyaGawa
david Moulton
daniel wriGht
alex wynaendts
MacieJ zaPala
Jan driessen
kelly Fu
adrian Grace
Mark Mullin
Marcelle noltenius
stiG nybo
Peacuteter zatykoacute
vicky zeldin
Disclaimer This repor t contains general information only and does
not constitute a solicitation or offer No rights can be
derived from this repor t Aegon its par tners and any of
their affiliates or employees do not guarantee warrant
or represent the accuracy or completeness of the
information contained in the repor t
Acknowledgements
33 | The Young Pragmatic and Penniless Generation
References and notes i For a comparison of different retirement systems see lsquoPensions at a Glance 2011rsquo OECD 2011 ii As the survey was carried out online the survey results in China are based toward people living in urban areas iii ldquoPensions Marketsrdquo TheCityUK March 2013 p9 iv Global Employment Trends for Youth 2013 A generation at risk International Labour Organisation 2013 p2 v Eurostat July 2013 vi OECD Employment and Labour Markets Key Tables from OECD No 2 2012 vii The Federal Reserve Bank of New York 2012 Quarterly Report on Household Debt March 29 2013 viii World Bank ix lsquoWorld-class povertyrsquo The Economist February 27 2013
httpwwweconomistcomblogsanalects201302chinas-poor x lsquoThe Chinese slow down in char tsrsquo The Economist July 15 2013 xi lsquoChina rsquos welfare system difficult inflexible and blatantly unfairrsquo The Guardian April 23 2013
httpwwwtheguardiancomglobal-development2013apr23china-welfare-system-inflexible-unfair xii lsquo The Dutch experience with Defined Ambition pensions and the impact on companiesrsquo Aegon Global Pensions March 12 2013
httpwwwaegonglobalpensionscomenHomePublicationsNews-archiveNewsThe-Dutch-experience-with-Defined
Ambition-pensions-and-what-that-may-mean-for-companies-in-the-Netherlands-and-the-UK
shy
The Young Pragmatic and Penniless Generation | 34
Contact information HE ADQUARTER S
Aegon NV
PO Box 85
2501 CB The Hague
Telephone +31 70 344 32 10
w w waegoncom
MEDIA REL ATIONS
Telephone +31 70 344 89 56
Email gcc-iraegoncom
Countr y Index score
Germany 548
China 541
Canada 524
United States 519
The Netherlands 488
United Kingdom 486
Sweden 483
France 475
Hungar y 473
Poland 463
Spain 440
Japan 430
Total 489
Appendix 1 Aegon Retirement Readiness Index (ARRI) - technical note
Aegon Retirement Readiness Index (ARRI)-technical note 2013 Weightings (2012 in brackets) A sample of 12000 pre and post retirees was drawn from 1 Personal responsibilit y 20 (30)
twelve countries Of these 10800 (90) were pre-retirees 2 Level of awareness 30 (35)
and these were chosen for fur ther analysis of their plans 3 Financial capability Understanding 30 (25)
for retirement The Index that was developed forms an 4 Retirement planning 50 (50)
assessment of how well an individual perceives the adequacy 5 Financial preparedness 60 (60)
of his her own finances and financial awareness specifically 6 Income replacement 35 (35)
for addressing his retirement needs
Note that the weights devised to show the relative
The lsquotargetrsquo for the Index impor tance of each question in calculating the Index add to
The question on current savings activity was designated as the 225 These were then re-scaled so that a final scale of 1 to
target question (dependent variable) for predicting the level of 10 was calculated
preparedness for retirement Responses to this question were
then correlated with each of the six key questions (variables) Final scores by country below to understand which were driving the activity These weightings were multiplied by the actual scores for each
This was done because it was not felt to be correct to give respondent for each of the six Index questions and aggregated
each of the six variables described below an equal weight as to obtain a provisional score This was then adjusted to
they appeared to have quite different relationships to the give countr y scores out of 1 to 10 (A score of 1 to 10 had
target question sufficient differentiation to be used as the scale for analysis)
1 Personal responsibilit y for income in retirement
2 Level of awareness of need to plan for retirement
3 F inancial capability Understanding of financial matters
regarding plans for retirement
4 Retirement planning Level of development of plans
5 Financial preparedness for retirement
6 Income replacement Level of projected income replacement
The weighting To estimate the statistical significance of the decline in overall
scores in this yearrsquos Index is theoretically incalculable
Two things have changed from 2012 to 2013
1 C anada and China have joined the sample
2 The new countries have thus influenced the weights of
emphasis placed on the 6 variables used to calculate
the score hence the weights attached to the complex
calculation have changed
However it is noticeable that for countries which were sampled
in both time periods the mean scores for the six individual
variables have almost invariably declined and on average more
than half of them have shown a significant level of decline
In particular the question lsquoDo you think you will achieve this
incomersquo has for all countries shown a significant level of
decline We thus hypothesize that the comparative results
show a significant decline
The Young Pragmatic and Penniless Generation | 36
Net
herl
ands
Net
herl
ands
Net
herl
ands
Ger
man
yG
erm
any
Ger
man
yBase 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
Better off 7 4 23 Sw
eden
Swed
en11 5 7 8 3 11 14 50 5
Swed
en
About the same 19 18 27 23 8 19 18 13 29 29 24 21 U
ntie
dU
ntie
dU
nite
d Worse off 66 74 41 58 79 69 71 76 51 47 21 55
Kin
gdom
Kin
gdom
Kin
gdom
Donrsquot know 9 3 9 9 9 4 4 8 9 10 6 19
Fran
ceFr
ance
Fran
ce
Chart 2 Education of 20 ndash 29 year olds by country Q Please choose from the following list the highest level of educational or professional qualification you have
Spai
nSp
ain
Spa
in
Pol
and
Pol
and
Pol
and
Hun
gary
Hun
gary
Hun
gar y
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
dU
nite
d 100 100 100 100 100 100 100 100 100
Stat
es100 100 100
Stat
esSt
ates
Less than high school graduate 2 44 6 14 1 3 2 7 1 3 Ca
nada
Cana
daC
anad
aHigh school graduate 11 33 53 23 22 22 4 41 14 21 1 2
Some college or trade school 46 2 9 9 9 19 37 14 28 20 4 33 Ch
ina
Chin
aC
hina
College degree University degree 31 15 27 30 41 43 21 33 50 46 9 57
Postgraduate degree or 8 3 3 23 25 11 36 1 8 9 80 6 qualification Ja
pan
Japa
n Ja
pan
Other 2 4 1 1 1 2 0 5 0 6 2
None 0 1 1 0 1 0 0
NET Less than undergrad degree 61 82 70 47 34 46 43 66 42 45 11 37
NET Undergrad degree or higher 39 18 30 53 66 54 57 34 58 55 89 63
Chart 3 Aegon Retirement Readiness Index scores for young employees by country
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
NET Low Index (0-5) 80 64 79 81 85 78 81 73 65 61 61 87
NET Medium Index (6-7) 15 30 18 15 14 21 17 23 25 31 31 12
NET High Index (8-10) 4 6 3 3 1 2 2 4 10 8 7 1
Appendix 2 Country comparisons Chart 1 The majority of young employees believe that they will be worse off in retirement compared to their parents Q Do you think that future generations of retirees will be better off or worse off than those currently in retirement
37 | The Young Pragmatic and Penniless Generation
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsI always make sure that 27 34 27 26 17 14 19 22 35 33 32 20 I am saving for retirement
I only save for retirement G
erm
any
Ger
man
y21 27 20 13 17 21 16 6 17 24 20 24 occasionally from time to time
I am not saving for retirement now 6 11 8 11 5 15 9 4 10 8 9 5 although I have in the past Sw
eden
Swed
en
I am not saving for retirement 35 23 34 46 53 40 49 54 36 33 38 46 though I do intend to U
nite
dU
ntie
dK
ingd
omK
ingd
om I have never saved for retirement and 11 6 10 5 8 10 6 13 3 2 1 6 donrsquot intend to
Fran
ceFr
ance
Chart 5 Younger people are more likely not to be using any means of retirement savings Sp
ain
Spai
nQ Which financial means if any are you currently using to prepare for your retirement
Pol
and
Pol
and
only asked in Germany only asked in Spain
Hun
gary
Hun
gary
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
dSt
ates
Stat
es100 100 100 100 100 100 100 100 100 100 100 100
Defined benefit plan 16 10 25 29 15 3 76 11 20 13 5 Ca
nada
Cana
daDefined contribution plan 28 10 17 19 19 14 10 23 40 7 3
Private pension 8 18 14 10 5 9 4 13 12 40 66 4 Ch
ina
Chin
a Government pension social security 12 43 14 21 8 7 4 18 27 33 71 35
Stocks 5 12 14 7 4 17 7 2 13 10 23 9
Bonds 1 8 5 6 2 16 4 2 8 13 14 3 Ja
pan
Japa
n
Mutual funds 2 14 23 4 2 10 3 4 7 16 9 6
Investment insurances (annuities) 2 3 2 3 2 9 4 5 2 4 6 1
Savings accounts 23 37 38 25 23 6 29 15 36 37 65 36
Investment property 2 10 6 7 9 2 5 2 5 11 18 1
Employee stock purchase 1 1 1 4 1 29 0 4 1 7 1
My home 10 5 8 7 7 8 4 6 6 14 30 1
Reverse mortgage 1 4 2 4
My business 2 1 3 2 2 4 1 1 2 4 12 1
Inheritance 3 11 7 11 7 9 9 8 7 9 6 2
Annuities 1 15 2 2 1 4 3 2 1 2 8
Long-term care insurance 2 1 3 2 9 5 1 6 4 7 1
Life insurance 6 11 8 8 14 3 18 15 19 18 36 17
Unterstuumltzungskasse aus 2 Eigenmitteln finanziert
Unterstuumltzungskasse vom 2 Arbeitgeber finanziert
Chart 4 Younger employees are much more likely to aspire to save for retirement Which of the following best explains your approach to saving for retirement This can include money you contribute to any long-term
investment including pensions stocks and shares investment-linked insurances property etc
Q
The Young Pragmatic and Penniless Generation | 38
Plan de empleo mixto 2 (combinacioacuten de las dos anteriores)
Other 1 6 4 0 1 2 2 3 2 2 3 3
None nothing 8 14 12 23 25 31 6 27 21 17 3 24
Donrsquot know 29 6 17 13 19 8 4 9 7 7 0 9
hart 6 The younger generation has more negative associations of retirement Which if any of the following words do you most associate with retirement
Net
herl
ands
Net
herl
ands
Ger
man
yG
erm
any
Swed
enSw
eden
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
d100 100 100 100 100 100 100 100 100 100 100 100
Kin
gdom
Kin
gdom
Freedom 35 32 36 39 19 26 11 20 35 40 37 33
Opportunity 7 27 25 18 4 8 9 10 17 16 9 16 Fr
ance
Fran
ceLeisure 58 48 36 41 23 24 43 32 50 50 55 6
Excitement 2 5 3 8 2 6 1 2 17 17 4 3 Sp
ain
Spai
nPoverty 11 26 23 11 26 14 37 44 7 5 6 20
Insecurity 34 24 18 16 20 18 35 56 10 9 18 44 P
olan
dP
olan
dLoneliness 4 10 17 16 12 7 11 8 5 9 20 12
Ill health 2 19 7 14 15 9 49 23 6 6 29 11 H
unga
ryH
unga
ryDependent on others 11 11 5 18 14 8 18 19 14 6 11 4
Tired 3 4 8 10 14 10 17 6 7 7 13 19 U
nite
dU
nite
dFar away 38 19 25 21 61 32 2 13 33
Stat
es33 14 22
Stat
es
Boredom 14 16 6 12 16 12 15 8 12 12 16 17 Ca
nada
Cana
daEnjoyment 21 16 17 23 14 29 5 3 37 37 35 15
None of the above 0 1 1 2 0 2 1 1 2 2 1 2
Donrsquot know 2 2 3 3 2 2 1 2 0 Ch
ina
6 Ch
ina
hart 7 Many young employees think they are not on course to achieve target retirement income Ja
pan
Japa
n Do you think you will achieve this income [your estimated income needed in retirement]
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
I donrsquot know if I am on course to 56 37 57 59 50 39 49 48 48 41 22 68 achieve my retirement income
No I am on course to achieve around one-quarter (25) of my 10 14 9 13 15 14 14 13 10 10 10 7 retirement income
No I am on course to achieve around 12 20 14 11 19 19 18 15 12 11 23 12 half of my retirement income
No I am on course to achieve around three-quarters (75) of my 8 14 7 4 8 15 9 8 6 11 20 5 retirement income
Yes I am on course to achieve my 15 15 13 14 8 13 11 17 25 27 25 8 retirement income
CQ
CQ
39 | The Young Pragmatic and Penniless Generation
Chart 8 Young people in most countries expect to retire before 65 Q At what age do you expect to retire from all paid employment
Net
herl
ands
Ger
man
y
Swed
en
Uni
ted
Kin
gdom
Fran
ce
Spai
n
Pol
and
Hun
gary
Uni
ted
Stat
es
Cana
da
Chin
a
Japa
n
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
40 or under 0 1 1 0 0 1 3 1 5 12
41-50 1 2 3 5 2 2 6 3 9 4 37 9
51-59 4 4 4 6 2 4 11 5 7 10 30 1
60 5 11 8 12 10 13 19 12 12 16 21 27
61-64 2 11 10 2 20 7 4 13 5 3 1 2
65 17 22 44 31 34 32 16 26 26 32 3 25
66-69 42 32 15 9 12 29 20 13 9 9 0 1
70 19 11 10 18 10 5 10 9 13 12 0 6
71+ 5 5 5 9 4 5 5 3 7 5 1 4
Never 2 1 1 2 2 2 6 4 1 0 0
Donrsquot know 2 3 2 5 3 2 8 9 5 5 1 13
Mean 67 65 65 65 64 65 63 64 63 64 53 59
Median 67 65 65 65 65 65 65 65 65 65 55 60
Chart 9 Younger employees feel they donrsquot have money to invest for retirement Q What is the single biggest obstacle to you saving for retirement right now
Net
herl
ands
Ger
man
y
Swed
en
Uni
ted
Kin
gdom
Fran
ce
Spai
n
Pol
and
Hun
gary
Uni
ted
Stat
es
Cana
da
Chin
a
Japa
n
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
The uncertain economic environment 19 8 13 9 13 19 11 14 12 9 29 27
Lack of money to invest 28 41 33 43 47 34 48 55 47 50 6 19
Fear of poor investment returns over the coming years 2 5 10 7 5 6 8 2 6 8 14 6
Complexity of investment products 4 4 4 3 5 3 5 2 12 5
I donrsquot know how to go about investing for the long-term 2 3 10 8 5 5 3 3 6 8 7 9
The fees charged by financial services companies 2 4 4 2 4 3 4 2 3 5 2 5
I canrsquot afford to take financial advice 3 3 6 8 2 4 3 5 3 2 3 2
I donrsquot trust the financial services industry 12 11 8 6 5 10 6 2 2 3 5 4
I donrsquot see the need to save for the long-term 6 1 2 2 3 3 3 1 2 1 4 3
Concerns about unstable currencies currency fluctuations 2 5 1 3 3 3 4 3 4 5 15 2
Other (PLEASE STATE) 3 3 1 1 3 2 4 6 2 2 1
Donrsquot know 17 12 11 7 8 6 3 6 8 6 3 17
The Young Pragmatic and Penniless Generation | 40
Chart 10 More money would incentivize young employees to save for retirement Q Which if any of the following would encourage you to save for retirement
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsMore generous tax breaks on long-term savings and pensions 20 44 30 32 27 23 42 42 33 43 40 32 products
Ger
man
yG
erm
any
Access to financial education so that I am more aware of what 24 6 14 21 16 22 21 12 23 24 43 25 I need to do for myself
Swed
enSw
eden
Access to professional financial advice so that I have personalized
Uni
ted
20 24 23 23 15 21 25 9 22 23 44 13 U
nite
drecommendations on what steps
Kin
gdom
Kin
gdom
I need to take
Simpler investment products that 12 33 19 28 20 Fr
ance
18 27 16 32 28 36 10 Fr
ance
I can understand with less jargon
Better and more frequent information about my retirement 16 28 20 27 27 23
Spai
n20 18 25 31 45 22
Spai
nsavings
Better legal protection in case I am 12 18 13 18 10 24 18 13 13 19 21 6 P
olan
dP
olan
dsold the wrong product
A pay rise 46 54 44 64 55 50 70 72 67 64 53 37
A better retirement plan pension H
unga
ryH
unga
ry27 32 25 33 29 26 42 35 39 44 33 32 match from my employer
Other 4 2 1 1 2 2 3 3 2 U
nite
d3 0
Uni
ted
Stat
esSt
ates
Donrsquot know 17 9 16 10 10 12 3 8 8 5 3 17
Not applicable - I already have 3 3 4 2 2 1 1 1 2 2 3 sufficient savings Ca
nada
Cana
da
Chin
aCh
ina
Chart 11 A majority of younger employees do not have a written plan for retirement Q Which of the following best describes your retirement planning strategy
Japa
n Ja
pan
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
I have a written plan 7 18 10 9 6 8 6 5 13 10 8 4
I have a plan but it is not written 24 47 37 25 23 31 29 31 37 44 55 24
down
I do not have a plan 61 32 51 61 62 55 62 58 45 42 34 61
Donrsquot know 7 3 3 5 8 6 3 6 4 4 3 12
41 | The Young Pragmatic and Penniless Generation
Chart 12 For young employees friends and family are the leading source of retirement savings information Q And which of these sources (of information) is most important to you
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
Bank adviser 6 11 19 5 25 5 7 4 3 17 10 2 N
ethe
rlan
dsN
ethe
rlan
dsProfessional financial adviser 12 22 10 12 10 19 19 22 21 25 19 10
Insurance agent spokesperson 3 10 2 3 1 3 6 2 3 0 3 2 G
erm
any
Ger
man
yInsurance company website 3 1 3 2 4 4 2 2 1 3 1
Personal finance websites online 8 5 7 8 5 4 10 8 12 6 10 8 retirement planning tools Sw
eden
Swed
enPersonal finance media 2 2 2 2 2 6 3 1 2 1 6 2
Government website 7 1 3 6 U
nite
d5 2 3 3 2 3 7 1
Uni
ted
Kin
gdom
Kin
gdom
Bank website 2 3 3 2 1 0 3 2 1 6 3 3
My employer 12 8 4 9 4 7 5 12 8 5 4 1 Fr
ance
Fran
ceAccountant 2 6 4 4 1 3 1 3 5 5 1 3
Lawyer 2 3 1 2 2 8 4 2 1 2 2 0 Sp
ain
Spai
nFriends and family 21 22 30 28 24 26 18 24 26 20 25 24
None of these P
olan
dP
olan
dNot applicable 21 7 16 18 19 13 17 15 14 9 5 41
Hun
gary
Hun
gary
Chart 13 Most young workers feel their employer should provide some kind of pension Q In the future what if anything should employers do to help people plan for retirement
Uni
ted
Uni
ted
Stat
esSt
ates
Cana
daCa
nada
Chin
aCh
ina
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 Ja
pan
Japa
n Employers should be required to 24 43 20 40 21 26 20 28 37 34 20 30 contribute to workersrsquo pensions
Employers should be required to make a pension available but not to 12 13 7 17 20 15 15 4 11 14 22 5 contribute into it
Employers should not be required to provide pensions but should 15 9 12 8 9 8 11 6 11 9 9 11 provide information on how to plan for retirement
Employers should provide a range of flexible benefits and 13 18 18 16 15 27 25 28 21 22 45 12 allow individuals to choose which benefits they actually want
Nothing ndash it should be left to individual employees to take care 2 2 5 1 4 3 3 5 6 5 1 9 of themselves
Nothing ndash it should be left to the government to take care of its 2 5 5 2 5 8 15 14 1 4 0 4 citizens
Donrsquot know 30 10 32 17 27 12 12 15 13 13 3 29
The Young Pragmatic and Penniless Generation | 42
Chart 14 Workplace pensions are relatively low down in young workersrsquo priorities when choosing a job Q How important to you would the following workplace benefits be if you were choosing your next job
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsBasic salary 86 93 88 91 88 92 90 94 90 93 96 94
Holiday entitlement 87 94 89 91 92 94 91 94 93 94 96 91 G
erm
any
Ger
man
yOvertime and bonus pay 86 93 87 88 89 90 89 94 90 91 97 90
Location of workplace 88 91 86 92 89 90 89 92 93 93 92 86 Sw
eden
Swed
enMedical health insurance 73 92 84 65 86 87 88 87 93 94 98 83
Opportunities for career progression 86 91 81 90 90 94 91 94 92 91 96 81 U
nite
dU
nite
dAccess to a workplace retirement 85 85 81 82
Kin
gdom
78 84 80 78 84 86 93 74 K
ingd
omplan with employer contributions
Access to good training provision 85 87 85 88 86 91 85 93 86 90 95 74 Fr
ance
Fran
ceFlexible working hours 79 87 58 86 81 89 81 87 91 91 92 57
Life insurance 72 75 79 69 80 82 Sp
ain
84 80 81 88 93 74 Sp
ain
(death in service benefits)
Phased retirement or other employer programs providing for 74 54 75 71 72 81 76 74 76 81 91 65
Pol
and
Pol
and
a transition into retirement
Ability to work past the normal 68 57 64 65 64 74 72 65 74 76 80 70 retirement age H
unga
ryH
unga
ry
Access to a workplace retirement 62 74 61 68 59 77 61 47 68 74 89 65 plan without employer contributions U
nite
dU
nite
dSt
ates
Stat
esEmployee share plans 50 72 54 65 59 73 61 51 64 73 91 55
Access to creche help with the 67 75 64 56 69 79 75 83 58 69 89 68 cost of childcare Ca
nada
Cana
da
Opportunities for foreign travel 53 54 60 55 50 71 58 66 57 61 79 37
Company car 51 46 45 47 49 63 51 49 36 49 69 Ch
ina
39 Ch
ina
Japa
n Ja
pan
Chart 15 Young workers think the state pension will need to be reformed Q With the cost of government pensions becoming a greater concern as people live longer which if any of the following do you think
the government should undertake
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
The government should reduce the overall cost of state pension 15 33 16 15 16 20 28 22 21 26 30 16 provision by reducing the value of individual pension plans
The government should increase overall funding available for the 12 21 30 22 14 34 19 26 21 18 29 10 state pension through raising taxes
43 | The Young Pragmatic and Penniless Generation
he government should take a alanced approach with some 27 26 12 30 28 23 24 16 34 31 38 41 eductions in individual payments nd some increases in tax
he government should not do nything State pension provision 7 2 12 5 3 4 3 3 5 4 0 5 ill remain perfectly affordable in he future
onrsquot know 38 19 29 29 39 20 26 34 19 21 4 28
Net
herl
ands
art 16 Products which protect against investment risk are the most important to young workers ( interested) Thinking about the types of financial products you could purchase to help provide you with security in retirement on a scale of 1 to 5
how interested are you in the following options G
erm
any
Swed
en
Uni
ted
Kin
gdom
ase 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 Fr
ance
100 100 100 100 100 100 100 100 100 100 100 100
product providing a guaranteed etirement income stream or 75 81 73 76 74 83 78 76 87 85 94 69
Spai
nifetime income in retirement
product which protects my 74 79 73 76 72 82 77 74 84 86 94 65 etirement income against inflation P
olan
d
product which guarantees that I 72 82 73 78 75 81 76 73 86 86 90 67 onrsquot lose my initial investment H
unga
ry product which helps meet the ost of long-term care if I become 74 79 74 77 70 79 76 71 86 85 84 66
Uni
ted
nable to look after myself St
ates
product which protects my capital 71 81 71 76 68 76 77 73 84 83 93 65 rom poor investment returns Ca
nada
product which generates a etirement income and allows 69 78 71 75 68 81 77 72 84 86 94 70 e to take a lump sum from the
Chin
anvestment should I need to
product where the annual 66 78 68 75 72 79 77 70 85 86 87 64 anagement charges are kept low Ja
pan
product which enables me to eep some control over how my 71 73 70 75 72 80 75 69 88 85 91 63 avings are invested during my etirement
product which manages the sset allocation so that I am never 68 70 67 73 66 76 71 67 80 83 95 60 xposed to a level of risk Irsquom not omfortable with
product which continues to rovide a retirement income to my 74 78 71 75 73 81 79 73 86 82 94 60 pouse in the event that I die first
product which protects my family gainst having to pay estate taxes 73 76 71 74 75 81 75 69 82 82 89 56 hen I die
product which locks in investment 72 71 63 73 64 71 59 56 81 84 89 61 eturns during the good years
Tbra
Tawt
D
ChQ
B
Arl
Ar
Ad
Acu
Af
Armi
Am
Aksr
Aaec
Aps
Aaw
Ar
The Young Pragmatic and Penniless Generation | 44
Another major influence on the ability of young employees to save for retirement is the growth of higher education One positive
is that college graduates are more likely to benefit from lower unemployment rates fare better during economic downturns and
experience higher incomes across their lifetime supporting aspirations like home ownership vii and helping to sustain long-term
savings and increased levels of retirement preparedness (Chart 4)
Chart 4 Graduates are likely to enjoy a greater sense of retirement preparedness Q Thinking about how much you are putting aside to fund your retirement are you saving enough
Base All lsquovery prepared for retirementrsquo
30 27
17 16Postgraduate degree or qualification
College degree University degree Some college or trade school
8 High school graduate
1 Below high school graduate Other
Conversely full-time education delays entry into the labor Why is this group of young employees important arket causing a loss of several years of full-time earnings By the middle of the century todayrsquos 20-29 year olds will
otential Moreover ballooning levels of student debt may have led the world economy through an economic recovery
ignificantly delay the onset of post-graduation saving and dramatic demographic shifts during a period of greater
etween 2004 and 2012 for example student debt in the uncertainty for modern retirement systems and other issues
nited States tripled to $966 billion nationwide The effect In developing countries such as China this group will be more
f this is that todayrsquos younger employees must take greater affluent than their parents but still need to deal with the
ersonal responsibility for their savings a challenge in the consequences of a rapidly aging population and an economy
urrent economic and financial circumstances which has passed its phase of rapid growth
For all of their challenges however this group of young people
represents the biggest opportunity to change societal savings
behaviors for the better The Aegon Retirement Readiness Survey
2013 provides insights into how best to achieve this through a
greater understanding of the grouprsquos outlooks and savings habits
m
p
s
B
U
o
p
c
The Young Pragmatic and Penniless Generation | 10
45
29
20
6
50
24
21
6
56
19
21
4
46
27
21
6
Better off About the same
Worse off Donrsquot know
All work
ers
20-29 ye
ar old
s
Male 2
0-29 ye
ar old
s
Fem
ale 2
0-29 ye
ar old
s
Chinarsquos young employees bucking the gloomy trend optimistic that their economy will continue to expand over
A key finding of this yearrsquos Aegon Retirement Readiness the next 30 years Concerns about the sustainability of
Survey is that Chinese employees are far more confident growth remain however Just 37 of Chinese 20-29 year
and optimistic about their financial future than employees olds believe that the Chinese economy will improve over
in other countries This is also true of younger employees the next 12 months ndash indeed 2013 will see the economyrsquos
Of those Chinese aged 20-29 half (50) believe that they slowest expansion since 1990 x Long term Chinarsquos rapidly
will be better off in retirement than those currently in aging population makes creating a comprehensive and
retirement Younger Chinese men are the most optimistic sound retirement system an urgent priority xi Coverage has
with 56 believing that they will be better off expanded in the past 10 years with reforms such as the
introduction of the Enterprise Annuity in 2005 yet it is still
This optimism is relatively justified Since 1980 Chinese GDP not clear how China will build a universal retirement system
per capita has increased thirty-fold from $193 to $6091 across both the government-sponsored and private sectors
in 2012 viii While this dramatic increase has not benefitted However the success of reforms carried out to date suggests
all Chinese equally ndash by the Chinese governmentrsquos measure that tax incentives and efforts to improve awareness are
99 million rural Chinese live in poverty ix ndash huge progress required as part of any long term solution
has been made and young people in China are generally
Chart 5 Chinarsquos younger employees are confident of a better retirement Q Do you think that future generations of retirees will be better off or worse off than those currently in retirement
Base Respondents in China
11 | The Young Pragmatic and Penniless Generation
Part 2 The savings outlook of young employees This chapter explores the financial behaviors and savings gaps and needs of 20-29 year olds through their attitudes toward financial issues the wider economy and the savings required for a comfortable retirement
The Young Pragmatic and Penniless Generation | 12
75
21
4
69
27
4
64
31
4 5
7
36
7
20-29
30-39
40-49
50-59
44
40
16
NET Low Index (0-5)
NET Medium Index (6-7)
NET High Index (8-10)
60-69
Retirement readiness and young employees However many young employees have concerns about achieving
Retirement is seen as a major life stage by young employees this Over a third (38) are pessimistic that they will not have
They typically expect to spend an average 20 years of their lives enough to live on in retirement and 44 are pessimistic about
in retirement a definition of retirement that is consistent across being able to choose when they retire Furthermore 28 have
all working age groups Retirement conjures broadly positive made no plans at all for their retirement which may help explain
associations Fully 63 of employees in their twenties aspire some of these concerns Health worries are less of an issue with
to travel during retirement 39 see it as a period of leisure 52 being optimistic that they will enjoy good health in old age
and 30 associate it with freedom The need to plan and save although 20 believe that they will not which is perhaps related
for this phase of life is also widely accepted Half (50) of to the 17 who associate retirement with ill health in general
employees in their twenties are aware of the need to save and
64 feel a high or very high degree of personal responsibility Overall 75 of employees in their twenties achieved a low
to ensure sufficient income for retirement retirement readiness score of 0-5 on the Aegon Retirement
Readiness Index (please refer to the glossary and Appendix 1 for
an explanation of the Index) The percentage of employees with a
low score of 0-5 drops with each increase in age group and is 44
among those in the lsquoat retirementrsquo group of 60 to 69 year olds
Chart 6 Aegon Retirement Readiness Index scores for employees across age groups For more information on the ARRI see page 36
Base All aged 20 - 69
Life stage and savings attitudes Getting married and starting a family are two such events
he Retirement Readiness Index reveals that retirement Of employees in their twenties 25 are married and
reparedness is to some extent age- and life stage-related 25 have children whereas for those in their 30s 54 are
hart 6) For younger employees the idea that retirement is married and 56 have children representing a major shift
r awayrsquo combined with lower earnings and other spending toward parenthood
riorities (such as higher education or purchasing a house)
an be powerful obstacles to saving for retirement Thus while Encouragingly while young employees are less likely to
5 of all employees say that they lsquoalways make surersquo that they have started saving for retirement many see themselves as
re saving for retirement just 25 of 20-29 year olds do so future lsquoaspiringrsquo savers Fully 41 intend to save in the future
t present over half (57) of 20-29 year olds are not saving compared to 27 of all employees and only 7 do not intend
r retirement compared to 46 of all employed adults to save for retirement This large group of aspiring savers
ven in China where 44 are always saving for retirement who are committed to the idea of putting money aside for
st 32 of 20-29 year olds do so retirement challenges the view that young people are unwilling
to save Furthermore since converting these young employees
his life cycle effect can be seen in numerous ways At the from aspiring savers to regular savers may depend on the
utset of adult life employees experience lower income and right economic conditions and appropriate financial incentives
igher spending as they prioritize and fund life events with a helping them is a major opportunity for governments and
ignificant impact on their ability or desire to save for retirement employers
T
p
(C
lsquofa
p
c
3
a
A
fo
E
ju
T
o
h
s
13 | The Young Pragmatic and Penniless Generation
35 25 20 19 12 9 27 41 7 7
I always make sure I only save for I am not saving for I am not saving for I have never saved that I am saving retirement occasionally retirement now although retirement though for retirement and for retirement from time to time I have in the past I do intend to donrsquot intend to
All 20 to 29 year olds
NET Low Index (0-5)
NET Medium Index (6-7)
NET High Index (8-10)
Chart 7 Younger employees are much more likely to aspire to save for retirement but the majority are not saving Q Which of the following best explains your approach to saving for retirement This can include money you contribute to any
long-term investment including pensions stocks and shares investment-linked insurances property etc
Other findings support the assertion that younger savers This can be seen in Chart 8 More 20-29 year olds claim that
are open to increasing their retirement savings Over a third they are not likely to be saving for retirement by any means
(37) of 20-29 year olds feel lsquovery responsiblersquo for ensuring (17 against 12 for all adults) and are generally less likely
a sufficient retirement income Note however that this does to use any of the savings products mentioned Revealingly
not translate into better developed financial plans and savings 20-29 year olds are far less likely to name lsquogovernment benefits
strategies Only 7 in this age group feel they have lsquowell in retirementrsquo as a source of retirement income although almost
developedrsquo personal retirement plans and 33 say they are all respondents have some such entitlement This may be due
lsquohardly saving anythingrsquo for retirement Clearly awareness of the to unawareness of government benefits and or greater
retirement situation does not translate into actual retirement scepticism about governmentsrsquo ability or willingness to
planning activity provide for them in old age
The Young Pragmatic and Penniless Generation | 14
Chart 8 Younger people are more likely not to be using any means of retirement savings Q Which financial means if any are you currently using to prepare for your retirement
33 Savings accounts 31
36 Government pension social security 24
25 Defined benefit plan 21
22 Private pension 17
23 Defined contribution plan 15
20 Life insurance 15
14 Stocks 10
14 My home 9
12 Mutual funds 8
9 Inheritance 7
9 Bonds 7
8 Investment property 7
5 Employee stock purchase 5
5 Investment insurances (annuities) 4
4 Long-term care insurance 4
6 Annuities 3
My business 2 3
Reverse mortgage 1 1
Other 3 2
12 None nothing 17
6 Donrsquot know 10
All 20 to 29 year olds
Leisure
Freedom
Far away
Insecurity
Enjoyment
Poverty
Ill health
Boredom
Opportunity
Dependent on others
Loneliness
Tired
Excitement
None of the above
Donrsquot know
Retirement associations What does the younger generation feel about retirement and want to get out of it Perhaps unsurprisingly 20-29 year olds are more
likely to be negative than older respondents associating retirement with boredom loneliness and ill health They are also far more
likely to believe retirement is lsquofar awayrsquo which is likely to be a barrier to retirement saving
15 | The Young Pragmatic and Penniless Generation
Chart 9 The younger generation has more negative associations with retirement Q Which if any of the following words do you most associate with retirement
44 Leisure 39
36 Freedom 30
17 Far away 26
25 Insecurity 25
25 Enjoyment 21
19 Poverty 19
15 Ill health 17
9 Boredom
13
16 Opportunity
13
10 Dependent on others
12
9 Loneliness
11
0
r olds
7Tired
1
6Excitement
6
2None of the above
1
2Donrsquot know 2
All 20 to 29 yea
Aspirations and responsibilities for retirement Income levels in retirement ung people have similar retirement aspirations to the general A high proportion (47) do not know if they are on course
pulation for example travel (63) spending time with to achieve their retirement income goal Combined with the
iends and family (61) and pursuing new hobbies (52) high level of financial responsibility young employees expect
r them however retirement also includes the responsibility of to assume in retirement it is clear that people not only need
ring for others Two-fifths (40) believe that lsquoadult children to build much greater awareness of what kind of financial
retirees should help through providing financial support to pressures they are likely to face in retirement but also require
eir parents if neededrsquo and 28 believe that this will affect greater support in establishing realistic retirement income
em directly in retirement through providing financial support targets which are capable of meeting their needs
their parents A fifth (21) also expect to spend some of
eir retirement caring for other family members while just
donrsquot expect to provide for anyone compared to 40 of all
ployees Clearly todayrsquos young employees anticipate serious
ancial responsibilities in their retirement
Yo
po
fr
Fo
ca
of
th
th
to
th
30
em
fin
The Young Pragmatic and Penniless Generation | 16
Chart 10 Many young employees do not think that they are on course to achieve target retirement income Q Do you think you will achieve this income [your estimated income needed in retirement]
Base 20-29 year olds
Yes I am on course to achieve my retirement
income
16
47
12
16
10
I donrsquot know if I am on course to achieve my
retirement income
No I am on course to achieve around
one-quarter (25) of
No I am on course to achieve around half of my
retirement income
No I am on course to achieve around
three-quarters (75) of my retirement income
532
China
586
Japan
United S
tate
s
628
Poland
635
Canad
a
636
Hunga
r
638
y
Fran
ce
645 647
Spain
Sweden
649
United K
ingdom
651
Germ
any
653
Nether
lands
666
my retirement income
When will young people retire Media reports about the need to raise the age of retirement appear to have influenced younger employees Fully 44 of 20-29 year
olds do not expect to be able to choose their retirement date although the younger generation do expect to retire at a similar age
to older employees 63 This varies considerable by country In the Netherlands young employees expect to retire eight years later
than those in Japan Some countries such as China and Japan have surprisingly low expected retirement ages suggesting that young
employees may benefit from having a better understanding of when government or workplace retirement benefits kick in
Chart 11 Young people in most countries expect to retire before 65 Q At what age do you expect to retire from all paid employment
Base 20-29 year olds
Despite expecting to retire at the same age as their parents younger employees are more open to a transition into retirement
reflecting their more flexible outlook toward work Around half (51) are happy to change the way they work in some way as they move
into retirement Just 8 expect to keep working as they do currently
17 | The Young Pragmatic and Penniless Generation
Part 3 What is holding young employees back Insights into what young employees feel is holding them back from saving or saving more can be used to encourage younger people to adopt more positive savings behaviors This chapter explores the attitudes of young employees toward the financial obstacles they face and asks what actions they have taken in preparation for retirement The findings reveal that while the majority lacks adequate planning for their retirement needs financial shortcomings are only part of the stor y Spending preferences play a key role in the savings gap of advanced economies
The Young Pragmatic and Penniless Generation | 18
Lack of money to invest 37
16 The uncertain economic environment
7 Fear of poor investment returns over the coming years
6 I donrsquot trust the financial services industry
6 I donrsquot know how to go about investing for the long-term
4 oncerns about unstable currencies currency fluctuations
4 Complexity of investment products
4 I canrsquot afford to take financial advice
3 The fees charged by financial services companies
3 I donrsquot see the need to save for the long-term
Other 2
Donrsquot know 8
A pay rise
More generous tax breaks on long-term savings and pensions products
A better retirement plan pension match from my employer
Better and more frequent information about my retirement savings
Simpler investment products that I can understand with less jargon
Access to professional financial advice so that I have personalized recommendations on what steps I need to take
Access to financial education so that I am more aware of what I need to do for myself
Better legal protection in case I am sold the wrong product
Other
Not applicable - I already have sufficient savings
Donrsquot know
Obstacles and incentives to saving
Chart 12 Younger employees feel they donrsquot have money to invest for retirement Q What is the single biggest obstacle to you saving for retirement right now
Base 20-29 year olds
C
What is the single biggest obstacle preventing twentysomethings that they rank pressing and desirable life goals such as marriage
m saving for retirement Not having enough money to invest starting a family vacations and other leisure activities above the
top of the list cited by over a third (37) although this figure need to plan for retirement This suggests the savings gap is
ops to just 6 in the emerging market of China where mean preference-driven
omes are the lowest by far ($18000) suggesting that lack of
sh may be partly a state of mind Young employees in China The biggest obstacle to retirement savings cited by one-eighth
actually more worried about local concerns such as economic (13) of respondents is either not knowing how to invest for the
certainty (29) and currency instability (15) Behavioral long-term or the complexity of investment products charges and
ance has an impact too with the way young employees frame fees Ready solutions to this include improving young employeesrsquo
eir financial priorities creating its own obstacles to saving financial literacy about retirement planning and creating easier
many as 57 of 20-29 year olds believe that saving for access to professional financial advice
tirement is important but not a current priority suggesting
fro
is
dr
inc
ca
are
un
fin
th
As
re
19 | The Young Pragmatic and Penniless Generation
Chart 13 More money would incentivize young employees to save for retirement Q Which if any of the following would encourage you to save for retirement
Base 20-29 year olds
57 A pay rise
More generous tax breaks on long-term savings and pensions products
34
A better retirement plan pension match from my employer
33
Better and more frequent information about my retirement savings 26
Simpler investment products that I can understand with less jargon 24
Access to professional financial advice so that I have personalized recommendations on what steps I need to take 23
Access to financial education so that I am more aware of what I need to do for myself 22
Better legal protection in case I am sold the wrong product 16
Other 2
Not applicable - I already have sufficient savings 2
Donrsquot know 10
Chart 14 Very few younger employees have a written plan for retirement Q Which of the following best describes your retirement planning strategy
Base 20-29 year olds
5 Donrsquot know I have a
written plan
8
34 I have a plan but it is not
52 written down
I do not have a plan
Turning to incentives greater remuneration predictably tops a list Retirement planning of what would encourage 20-29 year olds to save for retirement Retirement planning is essential to adequate retirement saving
More tellingly a third (33) would like their employer to provide although it is somewhat lacking in todayrsquos younger employees
a better retirement plan into which both parties contribute Over half (52) have no retirement planning strategy at all
Better information and simple products would also help more and only 8 have noted down their retirement strategy
people to save A quarter (26) would be encouraged to save by
better and more frequent information about retirement savings Nevertheless the respondents polled believe that the current
while a similar number (24) want simple investment products global economy makes retirement planning increasingly
that are easy to understand As with the previous question a important ndash 71 agreed with this statement It is clear from this
lack of investment knowledge and the complexity of investment that young people between the ages of 20 and 29 do not lack
products are revealed as obstacles to savings the will to save they lack the opportunity
The Young Pragmatic and Penniless Generation | 20
Part 4 Creating the right conditions for young employees to save How may young employeesrsquo obstacles to saving be overcome For retirement readiness this will be a defining question of the early twenty-first centur y ndash and an extremely challenging one given the number of serious issues affecting younger employeesrsquo finances What was learned in the previous chapter about encouraging young employees to save is a start This chapter examines which areas and triggers to saving can be unlocked and whether government employer or individual should take most responsibility
21 | The Young Pragmatic and Penniless Generation
Friends and family
Professional financial adviser
17
24
Bank adviser 9
Personal finance websites online retirement planning tools
My employer
Government website
4
8
7
Insurance agent spokesperson
Accountant
3
3
Personal finance media 3
Lawyer
Bank website
3
2
Insurance company website
Donrsquot know
2
15
Information and advice on retirement saving strong theme revealed by our findings is that younger This finding is remarkably consistent across the countries
mployees want more information on savings products and sur veyed despite significant differences in market makeup
etter access to advice The largest share 24 (compared although some differences exist For instance a quar ter
o 17 for all employees) finds friends and family to be the (25) of young employees in France turn to bank advisers
ost important source of advice followed by professional for financial information nearly triple the number among all
dvisers (17) and bank advisers (9) That young employees young people (9)
urn to friends and family first suggests an unmet need for
rofessional financial advice This is both a challenge and an
pportunity for the financial ser vices sector
hart 15 For young employees friends and family are the leading source of retirement savings information Which of these sources (of information) is most important to you
ase 20-29 year olds
A
e
b
t
m
a
t
p
o
CQ
B
What is the role of the workplace in retirement planning Does this influence what retirement benefits younger
In response to shifting employment patterns todayrsquos younger employees expect from their workplace Certainly a majority
employees are less loyal to their employers than older workers favor workplace retirement plans with 61 believing that these
Fully 39 of 20-29 year olds are planning to look for a new job should be a fundamental part of pay (although this is lower
in the next 12 months compared to 29 of all workers and than for employees overall) and just 4 feel that retirement
31 frequently think about quitting their jobs Strikingly while planning should be left entirely to individuals
53 of all workers plan to stay with their current employer
until retirement just 37 of 20-29 year olds say this However there is evidence of a slight shift in perceptions
Younger workers are less likely to want workplace retirement
Doubtless much of this is because younger workers are more plans over other factors Of those who want employer
mobile and have more opportunities Another trigger to lower retirement plan contributions only 46 wanted this even if
employer loyalty may be the expectation of holding more jobs it reduced benefits and 35 (compared to 43 of all workers)
and even pursuing multiple careers over a working lifetime if it cut jobs
The Young Pragmatic and Penniless Generation | 22
Donrsquot know Employers should be
required to contribute to workersrsquo pensions
5 Nothing ndash it should be left to the government to take 18
care of its citizens 28
4 Nothing ndash it should be left to individual employees to
take care of themselves
13
22
Employers should provide a range of flexible benefits
and allow individuals to choose which benefits they
actually want
10 Employers should
be required to make a pension available but not
to contribute into it
Employers should not be required to provide pensions but should
provide information on how to plan for retirement
Chart 16 Most young workers feel that their employer should provide some kind of pension Q In the future what if anything should employers do to help people plan for retirement
Base 20-29 year olds
Are other workplace benefits more important Younger workers were asked to rate the importance of various workplace benefits The results reveal how highly they value the
elements of their compensation package Chart 17 shows that 87 of young employees believe a workplace retirement plan with
employer contributions would be an important factor when choosing their next job While retirement may be decades away for
twentysomethings 80 believe programs provide for a phased retirement are important
23 | The Young Pragmatic and Penniless Generation
Basic salary 94
93 Holiday entitlement
91 Overtime and bonus pay
91 Location of workplace
88 Medical health insurance
87 Opportunities for career progression
Access to a workplace retirement plan with employer contributions 87
Access to good training provision 86
Flexible working hours 85
Life insurance (death in service benefits) 81
Phased retirement or other employer programs providing for a transition into retirement 80
Ability to work past the normal retirement age 70
Access to a workplace retirement plan without employer contributions
67
Employee stock plans 65
Access to creche help with the cost of childcare 59
Opportunities for foreign travel 50
Company car 43
Chart 17 Workplace retirement plans are a relatively low priority for younger workers when choosing a job How important to you would the following workplace benefits be if you were choosing your next job
ase 20-29 year olds
Q
B
Regarding workplace benefits provided by employers today considered just enough to fulfill basic needs and in China a
young employees are about as likely as all workers to be offered fully formed nationwide retirement system is still some way off
retirement tools such as annual plan statements and online The future shape and affordability of these plans is debated in
tools from their employer though it is concerning that 24 do all of the sur vey countries to var ying degrees
not know if such tools are available or not Those provided are
considered helpful Younger workersrsquo views on reform are important because
changes to government retirement benefits are more likely
The role of government to affect them than any other part of the working population
The generosity of government retirement benefits varies The main concern cited by 57 is of facing less generous
considerably in the countries sur veyed In some countries such government retirement benefits than those enjoyed by their
as France government benefits are the primar y mechanism parentsrsquo generation
for funding retirement while in the United Kingdom they are
The Young Pragmatic and Penniless Generation | 24
The government should reduce the overall cost of state pension provision by
reducing the value of Donrsquot know individual pension plans
25 22
4 The government should not do anything State pension provision will
remain perfectly affordable in the future
28
21 The government should increase overall funding
available for the state pension through
raising taxes
The government should take a balanced approach with some reductions in individual payments and
some increases in tax
Chart 18 Young workers think that the government retirement system will need to be reformed Q With the cost of government retirement benefits becoming a greater concern as people live longer which
if any of the following do you think the government should undertake
Base 20-29 year olds
The younger generation believes that the government cannot What do young employees look for in a retirement product continue to provide as it does now ndash just 4 think government The sur vey findings show that young employees have
benefits will remain affordable to society However there is no reser vations about employer and government retirement
consensus on what governments should do to reform retirement benefits So what then do they want from a private savings
plan systems Over a fifth (22) think retirement entitlements product The savings product feature most valued by younger
should be cut just over a fifth (21) think governments should workers is protection against investment risk (Char t 19)
raise taxes and more than a quarter (28) think a mixture of This may be in the form of no loss of initial investment a
the two is the best solution Another quarter admits that they guaranteed income stream or protection against inflation
donrsquot know what should be done This is reasonable ndash the initial investment of those farthest
from retirement is most at risk However less consideration
is given to savings grow th through investment returns This
suggests that there is an oppor tunity to educate young
workers about the trade-off between returns and risk
management and what they stand to gain
25 | The Young Pragmatic and Penniless Generation
Chart 19 Products which protect against investment risk are the most important to young workers ( interested) Q Thinking about the types of financial products you could purchase to help provide you with security in retirement on a scale of 1 to 5
how interested are you in the following options
Base 20-29 year olds
A product providing a guaranteed retirement income stream or lifetime income in retirement 82
A product which protects my retirement income against inflation 81
A product which guarantees that I donrsquot lose my initial investment 81
A product which helps meet the cost of long-term care if I become unable to look after myself 80
A product which protects my capital from poor investment returns 79
A product which generates a retirement income and allows me to take a lump sum from the investment should I need to 79
A product where the annual management charges are kept low 78
A product which enables me to keep some control over how my savings are invested during my retirement 77
A product which manages the asset allocation so that I am never exposed to a level of risk Irsquom not comfortable with 76
A product which continues to provide a retirement income to my spouse in the event that I die first 75
A product which protects my family against having to pay estate taxes when I die 72
A product which locks in investment returns during the good years 70
The lsquodefined ambitionrsquo retirement system in This removes some of the disadvantages of leaving
the Netherlands a sustainable retirement solution retirement liabilities exclusively up to employers
for young workers (defined benefit) or employees (defined contribution)
In the Netherlands as elsewhere young workers are faced In the Netherlands this is likely to involve legislation which
with an increasing retirement age decreasing government lets retirement funds automatically adjust pay-outs and
suppor t for retirement and declining traditional defined retirement age as life expectancy changes xii
benefit employer retirement plans Reforms proposed
by the Dutch may show a way for ward for all mature and This model has garnered interest elsewhere In the
aging economies United Kingdom Pensions Minister Steve Webb expressed
interest on a more limited scale with a government
rsquoDefined ambitionrsquo proposes that risks are not taken on fully guarantee for a minimum rate of return for defined
by either employer or employee but are shared contribution retirement plans
The Young Pragmatic and Penniless Generation | 26
Recommendations Enabling young workers to save The studyrsquos findings reveal that the majority of young workers (66) are either saving consistently or aspire to start saving but face challenges including debt low pay and funding for significant life events and generational changes to the economic landscape and government and employer support If young people are to achieve a prosperous retirement their willingness to save should be met with better opportunities to save Here is what can be done by employers governments and young people themselves to address retirement planning concerns for younger adults
27 | The Young Pragmatic and Penniless Generation
Individuals Employers and governments
Determine how much income you need in retirement Auto-enroll employees into a workplace retirement plan Young people accept the need to save for retirement but donrsquot If an auto-enrollment workplace retirement plan is feasible
know how to act on that need They can become more retirement this can play a major role in getting young workers saving early
savvy simply by talking to friends and family (as do 24 of and regularly Combined with auto-escalation (the automatic
our respondents already) or employers going online to use annual increase in retirement plan contributions) and matching
retirement calculators or reading the personal finance media contributions it can lead to greater retirement readiness
Seek out a financial advisor Provide more flexible savings products through the workplace Young people are faced with life events that make it easy to Not all savings journeys start with a retirement plan particularly
feel overwhelmed by financial priorities in addition to retirement for young people who may think of retirement as lsquotoo far awayrsquo
planning Soliciting advice from a finance professional early in Employers can kick-start the savings habit in younger workers
life (17 of young employees have done so already) helps with by providing flexible easy to access and easy to understand
planning and priorities and making sense of long-term finances savings plans as a more attractive starter option
Start saving now and save consistently Make company retirement plans more portable As with all employees young people will strengthen their Young people move jobs much more often than previous
retirement readiness simply by saving regularly Today only 25 generations of employees so savings like DC retirement plans
of young people always save yet even small regular amounts need to follow employees when they change jobs
will improve retirement readiness over time
Make tax incentives more effective Ask your employer about workplace retirement savings plans All countries encourage long-term savings through tax relief but
and other retirement benefits young people often arenrsquot aware of this or donrsquot understand it
While one third (33) of young people believe that a workplace A more targeted system of tax relief could help provide clearer
retirement savings plan provides a major opportunity to start and simpler signals to younger people about the financial
saving employers often experience difficulties in engaging benefits of long-term saving
younger employees in discussions about retirement planning
The workplace is an important channel for achieving retirement Make better financial education central to the workplace readiness so be sure to max out on any employer contributions retirement offer
Young people who aspire to save may be prevented from
doing so by setting the wrong financial priorities Workplace
retirement education ndash alongside professional advice ndash can help
guide young people toward the right long-term priorities at an
earlier age in life
The Young Pragmatic and Penniless Generation | 28
29 | The Young Pragmatic and Penniless Generation
Glossary
Aegon Retirement Readiness Index (ARRI) c areer average retirement plan The ARRI assesses the relative levels of retirement A type of defined benefit plan that is based on an
preparedness of employees across different countries on a employeersquos average retirement earnings over the duration
scale from 1 to 10 The Index is based on three questions of plan membership Same as average salary plan
covering attitudes and three questions covering behaviors
defined ambition (DA) plan average salary plan A type of retirement plan in which retirement plan risks
A type of defined benefit plan that is based on an are shared between the employer and the employee
employeersquos average retirement earnings over the duration It offers greater certainty to savers around the final value
of plan membership Same as career average plan of their retirement assets than in DC plans and less
cost volatility for employers than with DB plans In the
a nnuity Netherlands Defined Ambition (DA) retirement plans are
A form of contract sold by life insurance companies that being introduced in order to help relieve the pressure on
guarantees a fixed or variable payment to the annuitant employers while still trying to provide employees with a
at some future time usually retirement All capital in the more secure retirement plan The United Kingdom too is
annuity grows tax-deferred looking at DA retirement plans as a solution
auto enrollment defined benefit (DB) plan An employer-sponsored retirement plan in which the An employer-sponsored retirement plan where the amount
employer is able to enroll an employee without that of future benefits an employee will receive from the plan is
employeersquos express authorization The employer determines defined typically by a formula based on salary history and
what percentage of the employeersquos salary or wages is years of service The amount of contributions the employer
contributed to the plan The employee is able to change is required to make will depend on the investment returns
this percentage and can opt out of enrollment in the plan experienced by the plan and the benefits promised
Contrast defined contribution plan
a uto-escalation A feature of a plan which automatically increases the defined contribution (DC) plan percentage of (retirement) funds saved from salary An employer-sponsored retirement plan such as a 401(k)
This feature generally uses a default or standard plan or a 403(b) plan in the United States in which
contribution escalation rate contributions are made to individual participant accounts
Depending on the type of DC plan contributions may be
B aby Boomers made by the employee the employer or both
A term used to refer to people generally born between
the end of World War II in 1945 and the mid 1960s The employeersquos benefits at retirement or termination of
Other generations Silent Generation - the generation born employment are based on the employee and employer
between 1925 and 1945 Generation X - the generation contributions and earnings and losses on those
born between 1965 and 1979 Millennials or Generation contributions See also 401(k) and 403(b) plan
Y - the generation born between 1980 and 2000 and often Contrast defined benefit plan
classified as the children of Baby Boomers
The Young Pragmatic and Penniless Generation | 30
401(k) plan An employer sponsored retirement plan that enables
employees to make tax-deferred contributions from their
salaries to the plan
403(b) plan An employer-sponsored defined contribution plan that
enables employees of universities public schools and
non-profit organizations to make tax-deferred contributions
from their salaries to the plan
final salary plan A type of defined benefit plan in which retirement
benefits are based on final retirement salary in the years
immediately before retirement benefits are received
Millennials A term used to refer to the people born from about 1980
to 2000 brought up using digital technology They are
often classified as the children of Baby Boomers
r etirement (or pension) plan Provides replacement for salary when a person is no
longer working due to retirement In the case of a defined
benefit retirement plan the employer or union contributes
to the plan which pays a predetermined benefit for the
rest of the employeersquos life based on length of service and
salary Payments may be made either directly or through
an annuity Retirement plan payments are taxable income
to recipients in the year received The employer or union
has fiduciary responsibility to invest the retirement plan
funds in stocks bonds real estate and other assets earn
a satisfactory rate of return and make payments to retired
workers Retirement plan funds holding trillions of dollars
are one of the largest investment forces in the stock
bond and real estate markets If the employer defaults in
the United States retirement plan payments are usually
guaranteed by the Pension Benefit Guaranty Corporation
(PBGC)
variable annuities (VA) An insurance contract in which the insurance company
guarantees a minimum payment at the end of the
accumulation period The payments may vary depending
on the financial performance of the managed portfolio
31 | The Young Pragmatic and Penniless Generation
About Aegon Transamerica Center for Retirement Studiesreg and Cicero Consulting
Aegon Transamerica Center Aegon is an international life insurance pensions and asset reg management company with businesses in over 20 markets for Retirement Studies in the Americas Europe and Asia Aegon companies employ The Transamerica Center for Retirement Studiesreg (TCRS) is
around 24000 people and serve millions of customers a division of the Transamerica Institute a nonprofit private
worldwide foundation TCRS is dedicated to educating the public on
wwwaegoncom emerging trends surrounding retirement security in the
United States TCRSrsquo research emphasizes employer-sponsored
In 2010 Aegon became a founding member of the Global retirement plans issues faced by small to mid-sized companies
Coalition on Aging which seeks to raise awareness of aging and their employees and the implications of legislative and
issues among policymakers and the general public A major aim regulatory changes Transamerica Institute is funded by
of the coalition is to transform the way we think and speak contributions from Transamerica Life Insurance Company and
about aging replacing the familiar rhetoric of lsquoproblemsrsquo with its affiliates and may receive funds from unaffiliated third-
a more positive discussion of lsquopossibilitiesrsquo and lsquoopportunitiesrsquo parties For more information about TCRS please refer to
wwwglobalcoalitiononagingcom wwwtransamericacenterorg
Cicero Consulting A leading consultancy firm serving the banking insurance and
asset management sector Cicero specializes in public policy
and communications consulting as well as global thought
leadership and independent market research Cicero was
established in 2001 and now operates from offices in London
Brussels Washington and Singapore As a market leader in
pensions and retirement research Cicero designed
and analyzed the research and contributed to the report
wwwcicero-groupcom
The Young Pragmatic and Penniless Generation | 32
Marta acebo Mark Green Patricia Plas
Paula alvarez douGlas henck scott roane
Frits bart wendel hoFMan thurstan robinson
Grace basile
lynette belFry
andrew berwick
Frans van der horst
tatsuo kai
herMan kaPPelle
Patti rowey
sarah russell
Joost van schaGen
robin boon Gaacutebor kePecs dick schiethart
bert-JaaP brons Marco keiM erik schouten
douG brooks
libby buet
kent callahan
JaiMe kirkPatrick
bas knol
roGer koch
anGela seyMour Jackson
kate sMith
renske stoker
Jeanne de cervens
dana chen
Peter kunkel
alexander kuiPers
eyleen sun
MartiJn tans
arkadiusz chMurzynski
heidi cho
brian lewis
Mike linder
GreG tucker
Mark twiGG
siMon clow siMon luke catherine wanG
robert colliGnon Jason Ma Marc van weede
catherine collinson GrzeGorz Mathea tiM willaert
wendy daniels
Michel denizot
edit drevenka
Paul Middleton
takaoh MiyaGawa
david Moulton
daniel wriGht
alex wynaendts
MacieJ zaPala
Jan driessen
kelly Fu
adrian Grace
Mark Mullin
Marcelle noltenius
stiG nybo
Peacuteter zatykoacute
vicky zeldin
Disclaimer This repor t contains general information only and does
not constitute a solicitation or offer No rights can be
derived from this repor t Aegon its par tners and any of
their affiliates or employees do not guarantee warrant
or represent the accuracy or completeness of the
information contained in the repor t
Acknowledgements
33 | The Young Pragmatic and Penniless Generation
References and notes i For a comparison of different retirement systems see lsquoPensions at a Glance 2011rsquo OECD 2011 ii As the survey was carried out online the survey results in China are based toward people living in urban areas iii ldquoPensions Marketsrdquo TheCityUK March 2013 p9 iv Global Employment Trends for Youth 2013 A generation at risk International Labour Organisation 2013 p2 v Eurostat July 2013 vi OECD Employment and Labour Markets Key Tables from OECD No 2 2012 vii The Federal Reserve Bank of New York 2012 Quarterly Report on Household Debt March 29 2013 viii World Bank ix lsquoWorld-class povertyrsquo The Economist February 27 2013
httpwwweconomistcomblogsanalects201302chinas-poor x lsquoThe Chinese slow down in char tsrsquo The Economist July 15 2013 xi lsquoChina rsquos welfare system difficult inflexible and blatantly unfairrsquo The Guardian April 23 2013
httpwwwtheguardiancomglobal-development2013apr23china-welfare-system-inflexible-unfair xii lsquo The Dutch experience with Defined Ambition pensions and the impact on companiesrsquo Aegon Global Pensions March 12 2013
httpwwwaegonglobalpensionscomenHomePublicationsNews-archiveNewsThe-Dutch-experience-with-Defined
Ambition-pensions-and-what-that-may-mean-for-companies-in-the-Netherlands-and-the-UK
shy
The Young Pragmatic and Penniless Generation | 34
Contact information HE ADQUARTER S
Aegon NV
PO Box 85
2501 CB The Hague
Telephone +31 70 344 32 10
w w waegoncom
MEDIA REL ATIONS
Telephone +31 70 344 89 56
Email gcc-iraegoncom
Countr y Index score
Germany 548
China 541
Canada 524
United States 519
The Netherlands 488
United Kingdom 486
Sweden 483
France 475
Hungar y 473
Poland 463
Spain 440
Japan 430
Total 489
Appendix 1 Aegon Retirement Readiness Index (ARRI) - technical note
Aegon Retirement Readiness Index (ARRI)-technical note 2013 Weightings (2012 in brackets) A sample of 12000 pre and post retirees was drawn from 1 Personal responsibilit y 20 (30)
twelve countries Of these 10800 (90) were pre-retirees 2 Level of awareness 30 (35)
and these were chosen for fur ther analysis of their plans 3 Financial capability Understanding 30 (25)
for retirement The Index that was developed forms an 4 Retirement planning 50 (50)
assessment of how well an individual perceives the adequacy 5 Financial preparedness 60 (60)
of his her own finances and financial awareness specifically 6 Income replacement 35 (35)
for addressing his retirement needs
Note that the weights devised to show the relative
The lsquotargetrsquo for the Index impor tance of each question in calculating the Index add to
The question on current savings activity was designated as the 225 These were then re-scaled so that a final scale of 1 to
target question (dependent variable) for predicting the level of 10 was calculated
preparedness for retirement Responses to this question were
then correlated with each of the six key questions (variables) Final scores by country below to understand which were driving the activity These weightings were multiplied by the actual scores for each
This was done because it was not felt to be correct to give respondent for each of the six Index questions and aggregated
each of the six variables described below an equal weight as to obtain a provisional score This was then adjusted to
they appeared to have quite different relationships to the give countr y scores out of 1 to 10 (A score of 1 to 10 had
target question sufficient differentiation to be used as the scale for analysis)
1 Personal responsibilit y for income in retirement
2 Level of awareness of need to plan for retirement
3 F inancial capability Understanding of financial matters
regarding plans for retirement
4 Retirement planning Level of development of plans
5 Financial preparedness for retirement
6 Income replacement Level of projected income replacement
The weighting To estimate the statistical significance of the decline in overall
scores in this yearrsquos Index is theoretically incalculable
Two things have changed from 2012 to 2013
1 C anada and China have joined the sample
2 The new countries have thus influenced the weights of
emphasis placed on the 6 variables used to calculate
the score hence the weights attached to the complex
calculation have changed
However it is noticeable that for countries which were sampled
in both time periods the mean scores for the six individual
variables have almost invariably declined and on average more
than half of them have shown a significant level of decline
In particular the question lsquoDo you think you will achieve this
incomersquo has for all countries shown a significant level of
decline We thus hypothesize that the comparative results
show a significant decline
The Young Pragmatic and Penniless Generation | 36
Net
herl
ands
Net
herl
ands
Net
herl
ands
Ger
man
yG
erm
any
Ger
man
yBase 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
Better off 7 4 23 Sw
eden
Swed
en11 5 7 8 3 11 14 50 5
Swed
en
About the same 19 18 27 23 8 19 18 13 29 29 24 21 U
ntie
dU
ntie
dU
nite
d Worse off 66 74 41 58 79 69 71 76 51 47 21 55
Kin
gdom
Kin
gdom
Kin
gdom
Donrsquot know 9 3 9 9 9 4 4 8 9 10 6 19
Fran
ceFr
ance
Fran
ce
Chart 2 Education of 20 ndash 29 year olds by country Q Please choose from the following list the highest level of educational or professional qualification you have
Spai
nSp
ain
Spa
in
Pol
and
Pol
and
Pol
and
Hun
gary
Hun
gary
Hun
gar y
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
dU
nite
d 100 100 100 100 100 100 100 100 100
Stat
es100 100 100
Stat
esSt
ates
Less than high school graduate 2 44 6 14 1 3 2 7 1 3 Ca
nada
Cana
daC
anad
aHigh school graduate 11 33 53 23 22 22 4 41 14 21 1 2
Some college or trade school 46 2 9 9 9 19 37 14 28 20 4 33 Ch
ina
Chin
aC
hina
College degree University degree 31 15 27 30 41 43 21 33 50 46 9 57
Postgraduate degree or 8 3 3 23 25 11 36 1 8 9 80 6 qualification Ja
pan
Japa
n Ja
pan
Other 2 4 1 1 1 2 0 5 0 6 2
None 0 1 1 0 1 0 0
NET Less than undergrad degree 61 82 70 47 34 46 43 66 42 45 11 37
NET Undergrad degree or higher 39 18 30 53 66 54 57 34 58 55 89 63
Chart 3 Aegon Retirement Readiness Index scores for young employees by country
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
NET Low Index (0-5) 80 64 79 81 85 78 81 73 65 61 61 87
NET Medium Index (6-7) 15 30 18 15 14 21 17 23 25 31 31 12
NET High Index (8-10) 4 6 3 3 1 2 2 4 10 8 7 1
Appendix 2 Country comparisons Chart 1 The majority of young employees believe that they will be worse off in retirement compared to their parents Q Do you think that future generations of retirees will be better off or worse off than those currently in retirement
37 | The Young Pragmatic and Penniless Generation
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsI always make sure that 27 34 27 26 17 14 19 22 35 33 32 20 I am saving for retirement
I only save for retirement G
erm
any
Ger
man
y21 27 20 13 17 21 16 6 17 24 20 24 occasionally from time to time
I am not saving for retirement now 6 11 8 11 5 15 9 4 10 8 9 5 although I have in the past Sw
eden
Swed
en
I am not saving for retirement 35 23 34 46 53 40 49 54 36 33 38 46 though I do intend to U
nite
dU
ntie
dK
ingd
omK
ingd
om I have never saved for retirement and 11 6 10 5 8 10 6 13 3 2 1 6 donrsquot intend to
Fran
ceFr
ance
Chart 5 Younger people are more likely not to be using any means of retirement savings Sp
ain
Spai
nQ Which financial means if any are you currently using to prepare for your retirement
Pol
and
Pol
and
only asked in Germany only asked in Spain
Hun
gary
Hun
gary
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
dSt
ates
Stat
es100 100 100 100 100 100 100 100 100 100 100 100
Defined benefit plan 16 10 25 29 15 3 76 11 20 13 5 Ca
nada
Cana
daDefined contribution plan 28 10 17 19 19 14 10 23 40 7 3
Private pension 8 18 14 10 5 9 4 13 12 40 66 4 Ch
ina
Chin
a Government pension social security 12 43 14 21 8 7 4 18 27 33 71 35
Stocks 5 12 14 7 4 17 7 2 13 10 23 9
Bonds 1 8 5 6 2 16 4 2 8 13 14 3 Ja
pan
Japa
n
Mutual funds 2 14 23 4 2 10 3 4 7 16 9 6
Investment insurances (annuities) 2 3 2 3 2 9 4 5 2 4 6 1
Savings accounts 23 37 38 25 23 6 29 15 36 37 65 36
Investment property 2 10 6 7 9 2 5 2 5 11 18 1
Employee stock purchase 1 1 1 4 1 29 0 4 1 7 1
My home 10 5 8 7 7 8 4 6 6 14 30 1
Reverse mortgage 1 4 2 4
My business 2 1 3 2 2 4 1 1 2 4 12 1
Inheritance 3 11 7 11 7 9 9 8 7 9 6 2
Annuities 1 15 2 2 1 4 3 2 1 2 8
Long-term care insurance 2 1 3 2 9 5 1 6 4 7 1
Life insurance 6 11 8 8 14 3 18 15 19 18 36 17
Unterstuumltzungskasse aus 2 Eigenmitteln finanziert
Unterstuumltzungskasse vom 2 Arbeitgeber finanziert
Chart 4 Younger employees are much more likely to aspire to save for retirement Which of the following best explains your approach to saving for retirement This can include money you contribute to any long-term
investment including pensions stocks and shares investment-linked insurances property etc
Q
The Young Pragmatic and Penniless Generation | 38
Plan de empleo mixto 2 (combinacioacuten de las dos anteriores)
Other 1 6 4 0 1 2 2 3 2 2 3 3
None nothing 8 14 12 23 25 31 6 27 21 17 3 24
Donrsquot know 29 6 17 13 19 8 4 9 7 7 0 9
hart 6 The younger generation has more negative associations of retirement Which if any of the following words do you most associate with retirement
Net
herl
ands
Net
herl
ands
Ger
man
yG
erm
any
Swed
enSw
eden
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
d100 100 100 100 100 100 100 100 100 100 100 100
Kin
gdom
Kin
gdom
Freedom 35 32 36 39 19 26 11 20 35 40 37 33
Opportunity 7 27 25 18 4 8 9 10 17 16 9 16 Fr
ance
Fran
ceLeisure 58 48 36 41 23 24 43 32 50 50 55 6
Excitement 2 5 3 8 2 6 1 2 17 17 4 3 Sp
ain
Spai
nPoverty 11 26 23 11 26 14 37 44 7 5 6 20
Insecurity 34 24 18 16 20 18 35 56 10 9 18 44 P
olan
dP
olan
dLoneliness 4 10 17 16 12 7 11 8 5 9 20 12
Ill health 2 19 7 14 15 9 49 23 6 6 29 11 H
unga
ryH
unga
ryDependent on others 11 11 5 18 14 8 18 19 14 6 11 4
Tired 3 4 8 10 14 10 17 6 7 7 13 19 U
nite
dU
nite
dFar away 38 19 25 21 61 32 2 13 33
Stat
es33 14 22
Stat
es
Boredom 14 16 6 12 16 12 15 8 12 12 16 17 Ca
nada
Cana
daEnjoyment 21 16 17 23 14 29 5 3 37 37 35 15
None of the above 0 1 1 2 0 2 1 1 2 2 1 2
Donrsquot know 2 2 3 3 2 2 1 2 0 Ch
ina
6 Ch
ina
hart 7 Many young employees think they are not on course to achieve target retirement income Ja
pan
Japa
n Do you think you will achieve this income [your estimated income needed in retirement]
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
I donrsquot know if I am on course to 56 37 57 59 50 39 49 48 48 41 22 68 achieve my retirement income
No I am on course to achieve around one-quarter (25) of my 10 14 9 13 15 14 14 13 10 10 10 7 retirement income
No I am on course to achieve around 12 20 14 11 19 19 18 15 12 11 23 12 half of my retirement income
No I am on course to achieve around three-quarters (75) of my 8 14 7 4 8 15 9 8 6 11 20 5 retirement income
Yes I am on course to achieve my 15 15 13 14 8 13 11 17 25 27 25 8 retirement income
CQ
CQ
39 | The Young Pragmatic and Penniless Generation
Chart 8 Young people in most countries expect to retire before 65 Q At what age do you expect to retire from all paid employment
Net
herl
ands
Ger
man
y
Swed
en
Uni
ted
Kin
gdom
Fran
ce
Spai
n
Pol
and
Hun
gary
Uni
ted
Stat
es
Cana
da
Chin
a
Japa
n
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
40 or under 0 1 1 0 0 1 3 1 5 12
41-50 1 2 3 5 2 2 6 3 9 4 37 9
51-59 4 4 4 6 2 4 11 5 7 10 30 1
60 5 11 8 12 10 13 19 12 12 16 21 27
61-64 2 11 10 2 20 7 4 13 5 3 1 2
65 17 22 44 31 34 32 16 26 26 32 3 25
66-69 42 32 15 9 12 29 20 13 9 9 0 1
70 19 11 10 18 10 5 10 9 13 12 0 6
71+ 5 5 5 9 4 5 5 3 7 5 1 4
Never 2 1 1 2 2 2 6 4 1 0 0
Donrsquot know 2 3 2 5 3 2 8 9 5 5 1 13
Mean 67 65 65 65 64 65 63 64 63 64 53 59
Median 67 65 65 65 65 65 65 65 65 65 55 60
Chart 9 Younger employees feel they donrsquot have money to invest for retirement Q What is the single biggest obstacle to you saving for retirement right now
Net
herl
ands
Ger
man
y
Swed
en
Uni
ted
Kin
gdom
Fran
ce
Spai
n
Pol
and
Hun
gary
Uni
ted
Stat
es
Cana
da
Chin
a
Japa
n
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
The uncertain economic environment 19 8 13 9 13 19 11 14 12 9 29 27
Lack of money to invest 28 41 33 43 47 34 48 55 47 50 6 19
Fear of poor investment returns over the coming years 2 5 10 7 5 6 8 2 6 8 14 6
Complexity of investment products 4 4 4 3 5 3 5 2 12 5
I donrsquot know how to go about investing for the long-term 2 3 10 8 5 5 3 3 6 8 7 9
The fees charged by financial services companies 2 4 4 2 4 3 4 2 3 5 2 5
I canrsquot afford to take financial advice 3 3 6 8 2 4 3 5 3 2 3 2
I donrsquot trust the financial services industry 12 11 8 6 5 10 6 2 2 3 5 4
I donrsquot see the need to save for the long-term 6 1 2 2 3 3 3 1 2 1 4 3
Concerns about unstable currencies currency fluctuations 2 5 1 3 3 3 4 3 4 5 15 2
Other (PLEASE STATE) 3 3 1 1 3 2 4 6 2 2 1
Donrsquot know 17 12 11 7 8 6 3 6 8 6 3 17
The Young Pragmatic and Penniless Generation | 40
Chart 10 More money would incentivize young employees to save for retirement Q Which if any of the following would encourage you to save for retirement
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsMore generous tax breaks on long-term savings and pensions 20 44 30 32 27 23 42 42 33 43 40 32 products
Ger
man
yG
erm
any
Access to financial education so that I am more aware of what 24 6 14 21 16 22 21 12 23 24 43 25 I need to do for myself
Swed
enSw
eden
Access to professional financial advice so that I have personalized
Uni
ted
20 24 23 23 15 21 25 9 22 23 44 13 U
nite
drecommendations on what steps
Kin
gdom
Kin
gdom
I need to take
Simpler investment products that 12 33 19 28 20 Fr
ance
18 27 16 32 28 36 10 Fr
ance
I can understand with less jargon
Better and more frequent information about my retirement 16 28 20 27 27 23
Spai
n20 18 25 31 45 22
Spai
nsavings
Better legal protection in case I am 12 18 13 18 10 24 18 13 13 19 21 6 P
olan
dP
olan
dsold the wrong product
A pay rise 46 54 44 64 55 50 70 72 67 64 53 37
A better retirement plan pension H
unga
ryH
unga
ry27 32 25 33 29 26 42 35 39 44 33 32 match from my employer
Other 4 2 1 1 2 2 3 3 2 U
nite
d3 0
Uni
ted
Stat
esSt
ates
Donrsquot know 17 9 16 10 10 12 3 8 8 5 3 17
Not applicable - I already have 3 3 4 2 2 1 1 1 2 2 3 sufficient savings Ca
nada
Cana
da
Chin
aCh
ina
Chart 11 A majority of younger employees do not have a written plan for retirement Q Which of the following best describes your retirement planning strategy
Japa
n Ja
pan
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
I have a written plan 7 18 10 9 6 8 6 5 13 10 8 4
I have a plan but it is not written 24 47 37 25 23 31 29 31 37 44 55 24
down
I do not have a plan 61 32 51 61 62 55 62 58 45 42 34 61
Donrsquot know 7 3 3 5 8 6 3 6 4 4 3 12
41 | The Young Pragmatic and Penniless Generation
Chart 12 For young employees friends and family are the leading source of retirement savings information Q And which of these sources (of information) is most important to you
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
Bank adviser 6 11 19 5 25 5 7 4 3 17 10 2 N
ethe
rlan
dsN
ethe
rlan
dsProfessional financial adviser 12 22 10 12 10 19 19 22 21 25 19 10
Insurance agent spokesperson 3 10 2 3 1 3 6 2 3 0 3 2 G
erm
any
Ger
man
yInsurance company website 3 1 3 2 4 4 2 2 1 3 1
Personal finance websites online 8 5 7 8 5 4 10 8 12 6 10 8 retirement planning tools Sw
eden
Swed
enPersonal finance media 2 2 2 2 2 6 3 1 2 1 6 2
Government website 7 1 3 6 U
nite
d5 2 3 3 2 3 7 1
Uni
ted
Kin
gdom
Kin
gdom
Bank website 2 3 3 2 1 0 3 2 1 6 3 3
My employer 12 8 4 9 4 7 5 12 8 5 4 1 Fr
ance
Fran
ceAccountant 2 6 4 4 1 3 1 3 5 5 1 3
Lawyer 2 3 1 2 2 8 4 2 1 2 2 0 Sp
ain
Spai
nFriends and family 21 22 30 28 24 26 18 24 26 20 25 24
None of these P
olan
dP
olan
dNot applicable 21 7 16 18 19 13 17 15 14 9 5 41
Hun
gary
Hun
gary
Chart 13 Most young workers feel their employer should provide some kind of pension Q In the future what if anything should employers do to help people plan for retirement
Uni
ted
Uni
ted
Stat
esSt
ates
Cana
daCa
nada
Chin
aCh
ina
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 Ja
pan
Japa
n Employers should be required to 24 43 20 40 21 26 20 28 37 34 20 30 contribute to workersrsquo pensions
Employers should be required to make a pension available but not to 12 13 7 17 20 15 15 4 11 14 22 5 contribute into it
Employers should not be required to provide pensions but should 15 9 12 8 9 8 11 6 11 9 9 11 provide information on how to plan for retirement
Employers should provide a range of flexible benefits and 13 18 18 16 15 27 25 28 21 22 45 12 allow individuals to choose which benefits they actually want
Nothing ndash it should be left to individual employees to take care 2 2 5 1 4 3 3 5 6 5 1 9 of themselves
Nothing ndash it should be left to the government to take care of its 2 5 5 2 5 8 15 14 1 4 0 4 citizens
Donrsquot know 30 10 32 17 27 12 12 15 13 13 3 29
The Young Pragmatic and Penniless Generation | 42
Chart 14 Workplace pensions are relatively low down in young workersrsquo priorities when choosing a job Q How important to you would the following workplace benefits be if you were choosing your next job
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsBasic salary 86 93 88 91 88 92 90 94 90 93 96 94
Holiday entitlement 87 94 89 91 92 94 91 94 93 94 96 91 G
erm
any
Ger
man
yOvertime and bonus pay 86 93 87 88 89 90 89 94 90 91 97 90
Location of workplace 88 91 86 92 89 90 89 92 93 93 92 86 Sw
eden
Swed
enMedical health insurance 73 92 84 65 86 87 88 87 93 94 98 83
Opportunities for career progression 86 91 81 90 90 94 91 94 92 91 96 81 U
nite
dU
nite
dAccess to a workplace retirement 85 85 81 82
Kin
gdom
78 84 80 78 84 86 93 74 K
ingd
omplan with employer contributions
Access to good training provision 85 87 85 88 86 91 85 93 86 90 95 74 Fr
ance
Fran
ceFlexible working hours 79 87 58 86 81 89 81 87 91 91 92 57
Life insurance 72 75 79 69 80 82 Sp
ain
84 80 81 88 93 74 Sp
ain
(death in service benefits)
Phased retirement or other employer programs providing for 74 54 75 71 72 81 76 74 76 81 91 65
Pol
and
Pol
and
a transition into retirement
Ability to work past the normal 68 57 64 65 64 74 72 65 74 76 80 70 retirement age H
unga
ryH
unga
ry
Access to a workplace retirement 62 74 61 68 59 77 61 47 68 74 89 65 plan without employer contributions U
nite
dU
nite
dSt
ates
Stat
esEmployee share plans 50 72 54 65 59 73 61 51 64 73 91 55
Access to creche help with the 67 75 64 56 69 79 75 83 58 69 89 68 cost of childcare Ca
nada
Cana
da
Opportunities for foreign travel 53 54 60 55 50 71 58 66 57 61 79 37
Company car 51 46 45 47 49 63 51 49 36 49 69 Ch
ina
39 Ch
ina
Japa
n Ja
pan
Chart 15 Young workers think the state pension will need to be reformed Q With the cost of government pensions becoming a greater concern as people live longer which if any of the following do you think
the government should undertake
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
The government should reduce the overall cost of state pension 15 33 16 15 16 20 28 22 21 26 30 16 provision by reducing the value of individual pension plans
The government should increase overall funding available for the 12 21 30 22 14 34 19 26 21 18 29 10 state pension through raising taxes
43 | The Young Pragmatic and Penniless Generation
he government should take a alanced approach with some 27 26 12 30 28 23 24 16 34 31 38 41 eductions in individual payments nd some increases in tax
he government should not do nything State pension provision 7 2 12 5 3 4 3 3 5 4 0 5 ill remain perfectly affordable in he future
onrsquot know 38 19 29 29 39 20 26 34 19 21 4 28
Net
herl
ands
art 16 Products which protect against investment risk are the most important to young workers ( interested) Thinking about the types of financial products you could purchase to help provide you with security in retirement on a scale of 1 to 5
how interested are you in the following options G
erm
any
Swed
en
Uni
ted
Kin
gdom
ase 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 Fr
ance
100 100 100 100 100 100 100 100 100 100 100 100
product providing a guaranteed etirement income stream or 75 81 73 76 74 83 78 76 87 85 94 69
Spai
nifetime income in retirement
product which protects my 74 79 73 76 72 82 77 74 84 86 94 65 etirement income against inflation P
olan
d
product which guarantees that I 72 82 73 78 75 81 76 73 86 86 90 67 onrsquot lose my initial investment H
unga
ry product which helps meet the ost of long-term care if I become 74 79 74 77 70 79 76 71 86 85 84 66
Uni
ted
nable to look after myself St
ates
product which protects my capital 71 81 71 76 68 76 77 73 84 83 93 65 rom poor investment returns Ca
nada
product which generates a etirement income and allows 69 78 71 75 68 81 77 72 84 86 94 70 e to take a lump sum from the
Chin
anvestment should I need to
product where the annual 66 78 68 75 72 79 77 70 85 86 87 64 anagement charges are kept low Ja
pan
product which enables me to eep some control over how my 71 73 70 75 72 80 75 69 88 85 91 63 avings are invested during my etirement
product which manages the sset allocation so that I am never 68 70 67 73 66 76 71 67 80 83 95 60 xposed to a level of risk Irsquom not omfortable with
product which continues to rovide a retirement income to my 74 78 71 75 73 81 79 73 86 82 94 60 pouse in the event that I die first
product which protects my family gainst having to pay estate taxes 73 76 71 74 75 81 75 69 82 82 89 56 hen I die
product which locks in investment 72 71 63 73 64 71 59 56 81 84 89 61 eturns during the good years
Tbra
Tawt
D
ChQ
B
Arl
Ar
Ad
Acu
Af
Armi
Am
Aksr
Aaec
Aps
Aaw
Ar
The Young Pragmatic and Penniless Generation | 44
45
29
20
6
50
24
21
6
56
19
21
4
46
27
21
6
Better off About the same
Worse off Donrsquot know
All work
ers
20-29 ye
ar old
s
Male 2
0-29 ye
ar old
s
Fem
ale 2
0-29 ye
ar old
s
Chinarsquos young employees bucking the gloomy trend optimistic that their economy will continue to expand over
A key finding of this yearrsquos Aegon Retirement Readiness the next 30 years Concerns about the sustainability of
Survey is that Chinese employees are far more confident growth remain however Just 37 of Chinese 20-29 year
and optimistic about their financial future than employees olds believe that the Chinese economy will improve over
in other countries This is also true of younger employees the next 12 months ndash indeed 2013 will see the economyrsquos
Of those Chinese aged 20-29 half (50) believe that they slowest expansion since 1990 x Long term Chinarsquos rapidly
will be better off in retirement than those currently in aging population makes creating a comprehensive and
retirement Younger Chinese men are the most optimistic sound retirement system an urgent priority xi Coverage has
with 56 believing that they will be better off expanded in the past 10 years with reforms such as the
introduction of the Enterprise Annuity in 2005 yet it is still
This optimism is relatively justified Since 1980 Chinese GDP not clear how China will build a universal retirement system
per capita has increased thirty-fold from $193 to $6091 across both the government-sponsored and private sectors
in 2012 viii While this dramatic increase has not benefitted However the success of reforms carried out to date suggests
all Chinese equally ndash by the Chinese governmentrsquos measure that tax incentives and efforts to improve awareness are
99 million rural Chinese live in poverty ix ndash huge progress required as part of any long term solution
has been made and young people in China are generally
Chart 5 Chinarsquos younger employees are confident of a better retirement Q Do you think that future generations of retirees will be better off or worse off than those currently in retirement
Base Respondents in China
11 | The Young Pragmatic and Penniless Generation
Part 2 The savings outlook of young employees This chapter explores the financial behaviors and savings gaps and needs of 20-29 year olds through their attitudes toward financial issues the wider economy and the savings required for a comfortable retirement
The Young Pragmatic and Penniless Generation | 12
75
21
4
69
27
4
64
31
4 5
7
36
7
20-29
30-39
40-49
50-59
44
40
16
NET Low Index (0-5)
NET Medium Index (6-7)
NET High Index (8-10)
60-69
Retirement readiness and young employees However many young employees have concerns about achieving
Retirement is seen as a major life stage by young employees this Over a third (38) are pessimistic that they will not have
They typically expect to spend an average 20 years of their lives enough to live on in retirement and 44 are pessimistic about
in retirement a definition of retirement that is consistent across being able to choose when they retire Furthermore 28 have
all working age groups Retirement conjures broadly positive made no plans at all for their retirement which may help explain
associations Fully 63 of employees in their twenties aspire some of these concerns Health worries are less of an issue with
to travel during retirement 39 see it as a period of leisure 52 being optimistic that they will enjoy good health in old age
and 30 associate it with freedom The need to plan and save although 20 believe that they will not which is perhaps related
for this phase of life is also widely accepted Half (50) of to the 17 who associate retirement with ill health in general
employees in their twenties are aware of the need to save and
64 feel a high or very high degree of personal responsibility Overall 75 of employees in their twenties achieved a low
to ensure sufficient income for retirement retirement readiness score of 0-5 on the Aegon Retirement
Readiness Index (please refer to the glossary and Appendix 1 for
an explanation of the Index) The percentage of employees with a
low score of 0-5 drops with each increase in age group and is 44
among those in the lsquoat retirementrsquo group of 60 to 69 year olds
Chart 6 Aegon Retirement Readiness Index scores for employees across age groups For more information on the ARRI see page 36
Base All aged 20 - 69
Life stage and savings attitudes Getting married and starting a family are two such events
he Retirement Readiness Index reveals that retirement Of employees in their twenties 25 are married and
reparedness is to some extent age- and life stage-related 25 have children whereas for those in their 30s 54 are
hart 6) For younger employees the idea that retirement is married and 56 have children representing a major shift
r awayrsquo combined with lower earnings and other spending toward parenthood
riorities (such as higher education or purchasing a house)
an be powerful obstacles to saving for retirement Thus while Encouragingly while young employees are less likely to
5 of all employees say that they lsquoalways make surersquo that they have started saving for retirement many see themselves as
re saving for retirement just 25 of 20-29 year olds do so future lsquoaspiringrsquo savers Fully 41 intend to save in the future
t present over half (57) of 20-29 year olds are not saving compared to 27 of all employees and only 7 do not intend
r retirement compared to 46 of all employed adults to save for retirement This large group of aspiring savers
ven in China where 44 are always saving for retirement who are committed to the idea of putting money aside for
st 32 of 20-29 year olds do so retirement challenges the view that young people are unwilling
to save Furthermore since converting these young employees
his life cycle effect can be seen in numerous ways At the from aspiring savers to regular savers may depend on the
utset of adult life employees experience lower income and right economic conditions and appropriate financial incentives
igher spending as they prioritize and fund life events with a helping them is a major opportunity for governments and
ignificant impact on their ability or desire to save for retirement employers
T
p
(C
lsquofa
p
c
3
a
A
fo
E
ju
T
o
h
s
13 | The Young Pragmatic and Penniless Generation
35 25 20 19 12 9 27 41 7 7
I always make sure I only save for I am not saving for I am not saving for I have never saved that I am saving retirement occasionally retirement now although retirement though for retirement and for retirement from time to time I have in the past I do intend to donrsquot intend to
All 20 to 29 year olds
NET Low Index (0-5)
NET Medium Index (6-7)
NET High Index (8-10)
Chart 7 Younger employees are much more likely to aspire to save for retirement but the majority are not saving Q Which of the following best explains your approach to saving for retirement This can include money you contribute to any
long-term investment including pensions stocks and shares investment-linked insurances property etc
Other findings support the assertion that younger savers This can be seen in Chart 8 More 20-29 year olds claim that
are open to increasing their retirement savings Over a third they are not likely to be saving for retirement by any means
(37) of 20-29 year olds feel lsquovery responsiblersquo for ensuring (17 against 12 for all adults) and are generally less likely
a sufficient retirement income Note however that this does to use any of the savings products mentioned Revealingly
not translate into better developed financial plans and savings 20-29 year olds are far less likely to name lsquogovernment benefits
strategies Only 7 in this age group feel they have lsquowell in retirementrsquo as a source of retirement income although almost
developedrsquo personal retirement plans and 33 say they are all respondents have some such entitlement This may be due
lsquohardly saving anythingrsquo for retirement Clearly awareness of the to unawareness of government benefits and or greater
retirement situation does not translate into actual retirement scepticism about governmentsrsquo ability or willingness to
planning activity provide for them in old age
The Young Pragmatic and Penniless Generation | 14
Chart 8 Younger people are more likely not to be using any means of retirement savings Q Which financial means if any are you currently using to prepare for your retirement
33 Savings accounts 31
36 Government pension social security 24
25 Defined benefit plan 21
22 Private pension 17
23 Defined contribution plan 15
20 Life insurance 15
14 Stocks 10
14 My home 9
12 Mutual funds 8
9 Inheritance 7
9 Bonds 7
8 Investment property 7
5 Employee stock purchase 5
5 Investment insurances (annuities) 4
4 Long-term care insurance 4
6 Annuities 3
My business 2 3
Reverse mortgage 1 1
Other 3 2
12 None nothing 17
6 Donrsquot know 10
All 20 to 29 year olds
Leisure
Freedom
Far away
Insecurity
Enjoyment
Poverty
Ill health
Boredom
Opportunity
Dependent on others
Loneliness
Tired
Excitement
None of the above
Donrsquot know
Retirement associations What does the younger generation feel about retirement and want to get out of it Perhaps unsurprisingly 20-29 year olds are more
likely to be negative than older respondents associating retirement with boredom loneliness and ill health They are also far more
likely to believe retirement is lsquofar awayrsquo which is likely to be a barrier to retirement saving
15 | The Young Pragmatic and Penniless Generation
Chart 9 The younger generation has more negative associations with retirement Q Which if any of the following words do you most associate with retirement
44 Leisure 39
36 Freedom 30
17 Far away 26
25 Insecurity 25
25 Enjoyment 21
19 Poverty 19
15 Ill health 17
9 Boredom
13
16 Opportunity
13
10 Dependent on others
12
9 Loneliness
11
0
r olds
7Tired
1
6Excitement
6
2None of the above
1
2Donrsquot know 2
All 20 to 29 yea
Aspirations and responsibilities for retirement Income levels in retirement ung people have similar retirement aspirations to the general A high proportion (47) do not know if they are on course
pulation for example travel (63) spending time with to achieve their retirement income goal Combined with the
iends and family (61) and pursuing new hobbies (52) high level of financial responsibility young employees expect
r them however retirement also includes the responsibility of to assume in retirement it is clear that people not only need
ring for others Two-fifths (40) believe that lsquoadult children to build much greater awareness of what kind of financial
retirees should help through providing financial support to pressures they are likely to face in retirement but also require
eir parents if neededrsquo and 28 believe that this will affect greater support in establishing realistic retirement income
em directly in retirement through providing financial support targets which are capable of meeting their needs
their parents A fifth (21) also expect to spend some of
eir retirement caring for other family members while just
donrsquot expect to provide for anyone compared to 40 of all
ployees Clearly todayrsquos young employees anticipate serious
ancial responsibilities in their retirement
Yo
po
fr
Fo
ca
of
th
th
to
th
30
em
fin
The Young Pragmatic and Penniless Generation | 16
Chart 10 Many young employees do not think that they are on course to achieve target retirement income Q Do you think you will achieve this income [your estimated income needed in retirement]
Base 20-29 year olds
Yes I am on course to achieve my retirement
income
16
47
12
16
10
I donrsquot know if I am on course to achieve my
retirement income
No I am on course to achieve around
one-quarter (25) of
No I am on course to achieve around half of my
retirement income
No I am on course to achieve around
three-quarters (75) of my retirement income
532
China
586
Japan
United S
tate
s
628
Poland
635
Canad
a
636
Hunga
r
638
y
Fran
ce
645 647
Spain
Sweden
649
United K
ingdom
651
Germ
any
653
Nether
lands
666
my retirement income
When will young people retire Media reports about the need to raise the age of retirement appear to have influenced younger employees Fully 44 of 20-29 year
olds do not expect to be able to choose their retirement date although the younger generation do expect to retire at a similar age
to older employees 63 This varies considerable by country In the Netherlands young employees expect to retire eight years later
than those in Japan Some countries such as China and Japan have surprisingly low expected retirement ages suggesting that young
employees may benefit from having a better understanding of when government or workplace retirement benefits kick in
Chart 11 Young people in most countries expect to retire before 65 Q At what age do you expect to retire from all paid employment
Base 20-29 year olds
Despite expecting to retire at the same age as their parents younger employees are more open to a transition into retirement
reflecting their more flexible outlook toward work Around half (51) are happy to change the way they work in some way as they move
into retirement Just 8 expect to keep working as they do currently
17 | The Young Pragmatic and Penniless Generation
Part 3 What is holding young employees back Insights into what young employees feel is holding them back from saving or saving more can be used to encourage younger people to adopt more positive savings behaviors This chapter explores the attitudes of young employees toward the financial obstacles they face and asks what actions they have taken in preparation for retirement The findings reveal that while the majority lacks adequate planning for their retirement needs financial shortcomings are only part of the stor y Spending preferences play a key role in the savings gap of advanced economies
The Young Pragmatic and Penniless Generation | 18
Lack of money to invest 37
16 The uncertain economic environment
7 Fear of poor investment returns over the coming years
6 I donrsquot trust the financial services industry
6 I donrsquot know how to go about investing for the long-term
4 oncerns about unstable currencies currency fluctuations
4 Complexity of investment products
4 I canrsquot afford to take financial advice
3 The fees charged by financial services companies
3 I donrsquot see the need to save for the long-term
Other 2
Donrsquot know 8
A pay rise
More generous tax breaks on long-term savings and pensions products
A better retirement plan pension match from my employer
Better and more frequent information about my retirement savings
Simpler investment products that I can understand with less jargon
Access to professional financial advice so that I have personalized recommendations on what steps I need to take
Access to financial education so that I am more aware of what I need to do for myself
Better legal protection in case I am sold the wrong product
Other
Not applicable - I already have sufficient savings
Donrsquot know
Obstacles and incentives to saving
Chart 12 Younger employees feel they donrsquot have money to invest for retirement Q What is the single biggest obstacle to you saving for retirement right now
Base 20-29 year olds
C
What is the single biggest obstacle preventing twentysomethings that they rank pressing and desirable life goals such as marriage
m saving for retirement Not having enough money to invest starting a family vacations and other leisure activities above the
top of the list cited by over a third (37) although this figure need to plan for retirement This suggests the savings gap is
ops to just 6 in the emerging market of China where mean preference-driven
omes are the lowest by far ($18000) suggesting that lack of
sh may be partly a state of mind Young employees in China The biggest obstacle to retirement savings cited by one-eighth
actually more worried about local concerns such as economic (13) of respondents is either not knowing how to invest for the
certainty (29) and currency instability (15) Behavioral long-term or the complexity of investment products charges and
ance has an impact too with the way young employees frame fees Ready solutions to this include improving young employeesrsquo
eir financial priorities creating its own obstacles to saving financial literacy about retirement planning and creating easier
many as 57 of 20-29 year olds believe that saving for access to professional financial advice
tirement is important but not a current priority suggesting
fro
is
dr
inc
ca
are
un
fin
th
As
re
19 | The Young Pragmatic and Penniless Generation
Chart 13 More money would incentivize young employees to save for retirement Q Which if any of the following would encourage you to save for retirement
Base 20-29 year olds
57 A pay rise
More generous tax breaks on long-term savings and pensions products
34
A better retirement plan pension match from my employer
33
Better and more frequent information about my retirement savings 26
Simpler investment products that I can understand with less jargon 24
Access to professional financial advice so that I have personalized recommendations on what steps I need to take 23
Access to financial education so that I am more aware of what I need to do for myself 22
Better legal protection in case I am sold the wrong product 16
Other 2
Not applicable - I already have sufficient savings 2
Donrsquot know 10
Chart 14 Very few younger employees have a written plan for retirement Q Which of the following best describes your retirement planning strategy
Base 20-29 year olds
5 Donrsquot know I have a
written plan
8
34 I have a plan but it is not
52 written down
I do not have a plan
Turning to incentives greater remuneration predictably tops a list Retirement planning of what would encourage 20-29 year olds to save for retirement Retirement planning is essential to adequate retirement saving
More tellingly a third (33) would like their employer to provide although it is somewhat lacking in todayrsquos younger employees
a better retirement plan into which both parties contribute Over half (52) have no retirement planning strategy at all
Better information and simple products would also help more and only 8 have noted down their retirement strategy
people to save A quarter (26) would be encouraged to save by
better and more frequent information about retirement savings Nevertheless the respondents polled believe that the current
while a similar number (24) want simple investment products global economy makes retirement planning increasingly
that are easy to understand As with the previous question a important ndash 71 agreed with this statement It is clear from this
lack of investment knowledge and the complexity of investment that young people between the ages of 20 and 29 do not lack
products are revealed as obstacles to savings the will to save they lack the opportunity
The Young Pragmatic and Penniless Generation | 20
Part 4 Creating the right conditions for young employees to save How may young employeesrsquo obstacles to saving be overcome For retirement readiness this will be a defining question of the early twenty-first centur y ndash and an extremely challenging one given the number of serious issues affecting younger employeesrsquo finances What was learned in the previous chapter about encouraging young employees to save is a start This chapter examines which areas and triggers to saving can be unlocked and whether government employer or individual should take most responsibility
21 | The Young Pragmatic and Penniless Generation
Friends and family
Professional financial adviser
17
24
Bank adviser 9
Personal finance websites online retirement planning tools
My employer
Government website
4
8
7
Insurance agent spokesperson
Accountant
3
3
Personal finance media 3
Lawyer
Bank website
3
2
Insurance company website
Donrsquot know
2
15
Information and advice on retirement saving strong theme revealed by our findings is that younger This finding is remarkably consistent across the countries
mployees want more information on savings products and sur veyed despite significant differences in market makeup
etter access to advice The largest share 24 (compared although some differences exist For instance a quar ter
o 17 for all employees) finds friends and family to be the (25) of young employees in France turn to bank advisers
ost important source of advice followed by professional for financial information nearly triple the number among all
dvisers (17) and bank advisers (9) That young employees young people (9)
urn to friends and family first suggests an unmet need for
rofessional financial advice This is both a challenge and an
pportunity for the financial ser vices sector
hart 15 For young employees friends and family are the leading source of retirement savings information Which of these sources (of information) is most important to you
ase 20-29 year olds
A
e
b
t
m
a
t
p
o
CQ
B
What is the role of the workplace in retirement planning Does this influence what retirement benefits younger
In response to shifting employment patterns todayrsquos younger employees expect from their workplace Certainly a majority
employees are less loyal to their employers than older workers favor workplace retirement plans with 61 believing that these
Fully 39 of 20-29 year olds are planning to look for a new job should be a fundamental part of pay (although this is lower
in the next 12 months compared to 29 of all workers and than for employees overall) and just 4 feel that retirement
31 frequently think about quitting their jobs Strikingly while planning should be left entirely to individuals
53 of all workers plan to stay with their current employer
until retirement just 37 of 20-29 year olds say this However there is evidence of a slight shift in perceptions
Younger workers are less likely to want workplace retirement
Doubtless much of this is because younger workers are more plans over other factors Of those who want employer
mobile and have more opportunities Another trigger to lower retirement plan contributions only 46 wanted this even if
employer loyalty may be the expectation of holding more jobs it reduced benefits and 35 (compared to 43 of all workers)
and even pursuing multiple careers over a working lifetime if it cut jobs
The Young Pragmatic and Penniless Generation | 22
Donrsquot know Employers should be
required to contribute to workersrsquo pensions
5 Nothing ndash it should be left to the government to take 18
care of its citizens 28
4 Nothing ndash it should be left to individual employees to
take care of themselves
13
22
Employers should provide a range of flexible benefits
and allow individuals to choose which benefits they
actually want
10 Employers should
be required to make a pension available but not
to contribute into it
Employers should not be required to provide pensions but should
provide information on how to plan for retirement
Chart 16 Most young workers feel that their employer should provide some kind of pension Q In the future what if anything should employers do to help people plan for retirement
Base 20-29 year olds
Are other workplace benefits more important Younger workers were asked to rate the importance of various workplace benefits The results reveal how highly they value the
elements of their compensation package Chart 17 shows that 87 of young employees believe a workplace retirement plan with
employer contributions would be an important factor when choosing their next job While retirement may be decades away for
twentysomethings 80 believe programs provide for a phased retirement are important
23 | The Young Pragmatic and Penniless Generation
Basic salary 94
93 Holiday entitlement
91 Overtime and bonus pay
91 Location of workplace
88 Medical health insurance
87 Opportunities for career progression
Access to a workplace retirement plan with employer contributions 87
Access to good training provision 86
Flexible working hours 85
Life insurance (death in service benefits) 81
Phased retirement or other employer programs providing for a transition into retirement 80
Ability to work past the normal retirement age 70
Access to a workplace retirement plan without employer contributions
67
Employee stock plans 65
Access to creche help with the cost of childcare 59
Opportunities for foreign travel 50
Company car 43
Chart 17 Workplace retirement plans are a relatively low priority for younger workers when choosing a job How important to you would the following workplace benefits be if you were choosing your next job
ase 20-29 year olds
Q
B
Regarding workplace benefits provided by employers today considered just enough to fulfill basic needs and in China a
young employees are about as likely as all workers to be offered fully formed nationwide retirement system is still some way off
retirement tools such as annual plan statements and online The future shape and affordability of these plans is debated in
tools from their employer though it is concerning that 24 do all of the sur vey countries to var ying degrees
not know if such tools are available or not Those provided are
considered helpful Younger workersrsquo views on reform are important because
changes to government retirement benefits are more likely
The role of government to affect them than any other part of the working population
The generosity of government retirement benefits varies The main concern cited by 57 is of facing less generous
considerably in the countries sur veyed In some countries such government retirement benefits than those enjoyed by their
as France government benefits are the primar y mechanism parentsrsquo generation
for funding retirement while in the United Kingdom they are
The Young Pragmatic and Penniless Generation | 24
The government should reduce the overall cost of state pension provision by
reducing the value of Donrsquot know individual pension plans
25 22
4 The government should not do anything State pension provision will
remain perfectly affordable in the future
28
21 The government should increase overall funding
available for the state pension through
raising taxes
The government should take a balanced approach with some reductions in individual payments and
some increases in tax
Chart 18 Young workers think that the government retirement system will need to be reformed Q With the cost of government retirement benefits becoming a greater concern as people live longer which
if any of the following do you think the government should undertake
Base 20-29 year olds
The younger generation believes that the government cannot What do young employees look for in a retirement product continue to provide as it does now ndash just 4 think government The sur vey findings show that young employees have
benefits will remain affordable to society However there is no reser vations about employer and government retirement
consensus on what governments should do to reform retirement benefits So what then do they want from a private savings
plan systems Over a fifth (22) think retirement entitlements product The savings product feature most valued by younger
should be cut just over a fifth (21) think governments should workers is protection against investment risk (Char t 19)
raise taxes and more than a quarter (28) think a mixture of This may be in the form of no loss of initial investment a
the two is the best solution Another quarter admits that they guaranteed income stream or protection against inflation
donrsquot know what should be done This is reasonable ndash the initial investment of those farthest
from retirement is most at risk However less consideration
is given to savings grow th through investment returns This
suggests that there is an oppor tunity to educate young
workers about the trade-off between returns and risk
management and what they stand to gain
25 | The Young Pragmatic and Penniless Generation
Chart 19 Products which protect against investment risk are the most important to young workers ( interested) Q Thinking about the types of financial products you could purchase to help provide you with security in retirement on a scale of 1 to 5
how interested are you in the following options
Base 20-29 year olds
A product providing a guaranteed retirement income stream or lifetime income in retirement 82
A product which protects my retirement income against inflation 81
A product which guarantees that I donrsquot lose my initial investment 81
A product which helps meet the cost of long-term care if I become unable to look after myself 80
A product which protects my capital from poor investment returns 79
A product which generates a retirement income and allows me to take a lump sum from the investment should I need to 79
A product where the annual management charges are kept low 78
A product which enables me to keep some control over how my savings are invested during my retirement 77
A product which manages the asset allocation so that I am never exposed to a level of risk Irsquom not comfortable with 76
A product which continues to provide a retirement income to my spouse in the event that I die first 75
A product which protects my family against having to pay estate taxes when I die 72
A product which locks in investment returns during the good years 70
The lsquodefined ambitionrsquo retirement system in This removes some of the disadvantages of leaving
the Netherlands a sustainable retirement solution retirement liabilities exclusively up to employers
for young workers (defined benefit) or employees (defined contribution)
In the Netherlands as elsewhere young workers are faced In the Netherlands this is likely to involve legislation which
with an increasing retirement age decreasing government lets retirement funds automatically adjust pay-outs and
suppor t for retirement and declining traditional defined retirement age as life expectancy changes xii
benefit employer retirement plans Reforms proposed
by the Dutch may show a way for ward for all mature and This model has garnered interest elsewhere In the
aging economies United Kingdom Pensions Minister Steve Webb expressed
interest on a more limited scale with a government
rsquoDefined ambitionrsquo proposes that risks are not taken on fully guarantee for a minimum rate of return for defined
by either employer or employee but are shared contribution retirement plans
The Young Pragmatic and Penniless Generation | 26
Recommendations Enabling young workers to save The studyrsquos findings reveal that the majority of young workers (66) are either saving consistently or aspire to start saving but face challenges including debt low pay and funding for significant life events and generational changes to the economic landscape and government and employer support If young people are to achieve a prosperous retirement their willingness to save should be met with better opportunities to save Here is what can be done by employers governments and young people themselves to address retirement planning concerns for younger adults
27 | The Young Pragmatic and Penniless Generation
Individuals Employers and governments
Determine how much income you need in retirement Auto-enroll employees into a workplace retirement plan Young people accept the need to save for retirement but donrsquot If an auto-enrollment workplace retirement plan is feasible
know how to act on that need They can become more retirement this can play a major role in getting young workers saving early
savvy simply by talking to friends and family (as do 24 of and regularly Combined with auto-escalation (the automatic
our respondents already) or employers going online to use annual increase in retirement plan contributions) and matching
retirement calculators or reading the personal finance media contributions it can lead to greater retirement readiness
Seek out a financial advisor Provide more flexible savings products through the workplace Young people are faced with life events that make it easy to Not all savings journeys start with a retirement plan particularly
feel overwhelmed by financial priorities in addition to retirement for young people who may think of retirement as lsquotoo far awayrsquo
planning Soliciting advice from a finance professional early in Employers can kick-start the savings habit in younger workers
life (17 of young employees have done so already) helps with by providing flexible easy to access and easy to understand
planning and priorities and making sense of long-term finances savings plans as a more attractive starter option
Start saving now and save consistently Make company retirement plans more portable As with all employees young people will strengthen their Young people move jobs much more often than previous
retirement readiness simply by saving regularly Today only 25 generations of employees so savings like DC retirement plans
of young people always save yet even small regular amounts need to follow employees when they change jobs
will improve retirement readiness over time
Make tax incentives more effective Ask your employer about workplace retirement savings plans All countries encourage long-term savings through tax relief but
and other retirement benefits young people often arenrsquot aware of this or donrsquot understand it
While one third (33) of young people believe that a workplace A more targeted system of tax relief could help provide clearer
retirement savings plan provides a major opportunity to start and simpler signals to younger people about the financial
saving employers often experience difficulties in engaging benefits of long-term saving
younger employees in discussions about retirement planning
The workplace is an important channel for achieving retirement Make better financial education central to the workplace readiness so be sure to max out on any employer contributions retirement offer
Young people who aspire to save may be prevented from
doing so by setting the wrong financial priorities Workplace
retirement education ndash alongside professional advice ndash can help
guide young people toward the right long-term priorities at an
earlier age in life
The Young Pragmatic and Penniless Generation | 28
29 | The Young Pragmatic and Penniless Generation
Glossary
Aegon Retirement Readiness Index (ARRI) c areer average retirement plan The ARRI assesses the relative levels of retirement A type of defined benefit plan that is based on an
preparedness of employees across different countries on a employeersquos average retirement earnings over the duration
scale from 1 to 10 The Index is based on three questions of plan membership Same as average salary plan
covering attitudes and three questions covering behaviors
defined ambition (DA) plan average salary plan A type of retirement plan in which retirement plan risks
A type of defined benefit plan that is based on an are shared between the employer and the employee
employeersquos average retirement earnings over the duration It offers greater certainty to savers around the final value
of plan membership Same as career average plan of their retirement assets than in DC plans and less
cost volatility for employers than with DB plans In the
a nnuity Netherlands Defined Ambition (DA) retirement plans are
A form of contract sold by life insurance companies that being introduced in order to help relieve the pressure on
guarantees a fixed or variable payment to the annuitant employers while still trying to provide employees with a
at some future time usually retirement All capital in the more secure retirement plan The United Kingdom too is
annuity grows tax-deferred looking at DA retirement plans as a solution
auto enrollment defined benefit (DB) plan An employer-sponsored retirement plan in which the An employer-sponsored retirement plan where the amount
employer is able to enroll an employee without that of future benefits an employee will receive from the plan is
employeersquos express authorization The employer determines defined typically by a formula based on salary history and
what percentage of the employeersquos salary or wages is years of service The amount of contributions the employer
contributed to the plan The employee is able to change is required to make will depend on the investment returns
this percentage and can opt out of enrollment in the plan experienced by the plan and the benefits promised
Contrast defined contribution plan
a uto-escalation A feature of a plan which automatically increases the defined contribution (DC) plan percentage of (retirement) funds saved from salary An employer-sponsored retirement plan such as a 401(k)
This feature generally uses a default or standard plan or a 403(b) plan in the United States in which
contribution escalation rate contributions are made to individual participant accounts
Depending on the type of DC plan contributions may be
B aby Boomers made by the employee the employer or both
A term used to refer to people generally born between
the end of World War II in 1945 and the mid 1960s The employeersquos benefits at retirement or termination of
Other generations Silent Generation - the generation born employment are based on the employee and employer
between 1925 and 1945 Generation X - the generation contributions and earnings and losses on those
born between 1965 and 1979 Millennials or Generation contributions See also 401(k) and 403(b) plan
Y - the generation born between 1980 and 2000 and often Contrast defined benefit plan
classified as the children of Baby Boomers
The Young Pragmatic and Penniless Generation | 30
401(k) plan An employer sponsored retirement plan that enables
employees to make tax-deferred contributions from their
salaries to the plan
403(b) plan An employer-sponsored defined contribution plan that
enables employees of universities public schools and
non-profit organizations to make tax-deferred contributions
from their salaries to the plan
final salary plan A type of defined benefit plan in which retirement
benefits are based on final retirement salary in the years
immediately before retirement benefits are received
Millennials A term used to refer to the people born from about 1980
to 2000 brought up using digital technology They are
often classified as the children of Baby Boomers
r etirement (or pension) plan Provides replacement for salary when a person is no
longer working due to retirement In the case of a defined
benefit retirement plan the employer or union contributes
to the plan which pays a predetermined benefit for the
rest of the employeersquos life based on length of service and
salary Payments may be made either directly or through
an annuity Retirement plan payments are taxable income
to recipients in the year received The employer or union
has fiduciary responsibility to invest the retirement plan
funds in stocks bonds real estate and other assets earn
a satisfactory rate of return and make payments to retired
workers Retirement plan funds holding trillions of dollars
are one of the largest investment forces in the stock
bond and real estate markets If the employer defaults in
the United States retirement plan payments are usually
guaranteed by the Pension Benefit Guaranty Corporation
(PBGC)
variable annuities (VA) An insurance contract in which the insurance company
guarantees a minimum payment at the end of the
accumulation period The payments may vary depending
on the financial performance of the managed portfolio
31 | The Young Pragmatic and Penniless Generation
About Aegon Transamerica Center for Retirement Studiesreg and Cicero Consulting
Aegon Transamerica Center Aegon is an international life insurance pensions and asset reg management company with businesses in over 20 markets for Retirement Studies in the Americas Europe and Asia Aegon companies employ The Transamerica Center for Retirement Studiesreg (TCRS) is
around 24000 people and serve millions of customers a division of the Transamerica Institute a nonprofit private
worldwide foundation TCRS is dedicated to educating the public on
wwwaegoncom emerging trends surrounding retirement security in the
United States TCRSrsquo research emphasizes employer-sponsored
In 2010 Aegon became a founding member of the Global retirement plans issues faced by small to mid-sized companies
Coalition on Aging which seeks to raise awareness of aging and their employees and the implications of legislative and
issues among policymakers and the general public A major aim regulatory changes Transamerica Institute is funded by
of the coalition is to transform the way we think and speak contributions from Transamerica Life Insurance Company and
about aging replacing the familiar rhetoric of lsquoproblemsrsquo with its affiliates and may receive funds from unaffiliated third-
a more positive discussion of lsquopossibilitiesrsquo and lsquoopportunitiesrsquo parties For more information about TCRS please refer to
wwwglobalcoalitiononagingcom wwwtransamericacenterorg
Cicero Consulting A leading consultancy firm serving the banking insurance and
asset management sector Cicero specializes in public policy
and communications consulting as well as global thought
leadership and independent market research Cicero was
established in 2001 and now operates from offices in London
Brussels Washington and Singapore As a market leader in
pensions and retirement research Cicero designed
and analyzed the research and contributed to the report
wwwcicero-groupcom
The Young Pragmatic and Penniless Generation | 32
Marta acebo Mark Green Patricia Plas
Paula alvarez douGlas henck scott roane
Frits bart wendel hoFMan thurstan robinson
Grace basile
lynette belFry
andrew berwick
Frans van der horst
tatsuo kai
herMan kaPPelle
Patti rowey
sarah russell
Joost van schaGen
robin boon Gaacutebor kePecs dick schiethart
bert-JaaP brons Marco keiM erik schouten
douG brooks
libby buet
kent callahan
JaiMe kirkPatrick
bas knol
roGer koch
anGela seyMour Jackson
kate sMith
renske stoker
Jeanne de cervens
dana chen
Peter kunkel
alexander kuiPers
eyleen sun
MartiJn tans
arkadiusz chMurzynski
heidi cho
brian lewis
Mike linder
GreG tucker
Mark twiGG
siMon clow siMon luke catherine wanG
robert colliGnon Jason Ma Marc van weede
catherine collinson GrzeGorz Mathea tiM willaert
wendy daniels
Michel denizot
edit drevenka
Paul Middleton
takaoh MiyaGawa
david Moulton
daniel wriGht
alex wynaendts
MacieJ zaPala
Jan driessen
kelly Fu
adrian Grace
Mark Mullin
Marcelle noltenius
stiG nybo
Peacuteter zatykoacute
vicky zeldin
Disclaimer This repor t contains general information only and does
not constitute a solicitation or offer No rights can be
derived from this repor t Aegon its par tners and any of
their affiliates or employees do not guarantee warrant
or represent the accuracy or completeness of the
information contained in the repor t
Acknowledgements
33 | The Young Pragmatic and Penniless Generation
References and notes i For a comparison of different retirement systems see lsquoPensions at a Glance 2011rsquo OECD 2011 ii As the survey was carried out online the survey results in China are based toward people living in urban areas iii ldquoPensions Marketsrdquo TheCityUK March 2013 p9 iv Global Employment Trends for Youth 2013 A generation at risk International Labour Organisation 2013 p2 v Eurostat July 2013 vi OECD Employment and Labour Markets Key Tables from OECD No 2 2012 vii The Federal Reserve Bank of New York 2012 Quarterly Report on Household Debt March 29 2013 viii World Bank ix lsquoWorld-class povertyrsquo The Economist February 27 2013
httpwwweconomistcomblogsanalects201302chinas-poor x lsquoThe Chinese slow down in char tsrsquo The Economist July 15 2013 xi lsquoChina rsquos welfare system difficult inflexible and blatantly unfairrsquo The Guardian April 23 2013
httpwwwtheguardiancomglobal-development2013apr23china-welfare-system-inflexible-unfair xii lsquo The Dutch experience with Defined Ambition pensions and the impact on companiesrsquo Aegon Global Pensions March 12 2013
httpwwwaegonglobalpensionscomenHomePublicationsNews-archiveNewsThe-Dutch-experience-with-Defined
Ambition-pensions-and-what-that-may-mean-for-companies-in-the-Netherlands-and-the-UK
shy
The Young Pragmatic and Penniless Generation | 34
Contact information HE ADQUARTER S
Aegon NV
PO Box 85
2501 CB The Hague
Telephone +31 70 344 32 10
w w waegoncom
MEDIA REL ATIONS
Telephone +31 70 344 89 56
Email gcc-iraegoncom
Countr y Index score
Germany 548
China 541
Canada 524
United States 519
The Netherlands 488
United Kingdom 486
Sweden 483
France 475
Hungar y 473
Poland 463
Spain 440
Japan 430
Total 489
Appendix 1 Aegon Retirement Readiness Index (ARRI) - technical note
Aegon Retirement Readiness Index (ARRI)-technical note 2013 Weightings (2012 in brackets) A sample of 12000 pre and post retirees was drawn from 1 Personal responsibilit y 20 (30)
twelve countries Of these 10800 (90) were pre-retirees 2 Level of awareness 30 (35)
and these were chosen for fur ther analysis of their plans 3 Financial capability Understanding 30 (25)
for retirement The Index that was developed forms an 4 Retirement planning 50 (50)
assessment of how well an individual perceives the adequacy 5 Financial preparedness 60 (60)
of his her own finances and financial awareness specifically 6 Income replacement 35 (35)
for addressing his retirement needs
Note that the weights devised to show the relative
The lsquotargetrsquo for the Index impor tance of each question in calculating the Index add to
The question on current savings activity was designated as the 225 These were then re-scaled so that a final scale of 1 to
target question (dependent variable) for predicting the level of 10 was calculated
preparedness for retirement Responses to this question were
then correlated with each of the six key questions (variables) Final scores by country below to understand which were driving the activity These weightings were multiplied by the actual scores for each
This was done because it was not felt to be correct to give respondent for each of the six Index questions and aggregated
each of the six variables described below an equal weight as to obtain a provisional score This was then adjusted to
they appeared to have quite different relationships to the give countr y scores out of 1 to 10 (A score of 1 to 10 had
target question sufficient differentiation to be used as the scale for analysis)
1 Personal responsibilit y for income in retirement
2 Level of awareness of need to plan for retirement
3 F inancial capability Understanding of financial matters
regarding plans for retirement
4 Retirement planning Level of development of plans
5 Financial preparedness for retirement
6 Income replacement Level of projected income replacement
The weighting To estimate the statistical significance of the decline in overall
scores in this yearrsquos Index is theoretically incalculable
Two things have changed from 2012 to 2013
1 C anada and China have joined the sample
2 The new countries have thus influenced the weights of
emphasis placed on the 6 variables used to calculate
the score hence the weights attached to the complex
calculation have changed
However it is noticeable that for countries which were sampled
in both time periods the mean scores for the six individual
variables have almost invariably declined and on average more
than half of them have shown a significant level of decline
In particular the question lsquoDo you think you will achieve this
incomersquo has for all countries shown a significant level of
decline We thus hypothesize that the comparative results
show a significant decline
The Young Pragmatic and Penniless Generation | 36
Net
herl
ands
Net
herl
ands
Net
herl
ands
Ger
man
yG
erm
any
Ger
man
yBase 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
Better off 7 4 23 Sw
eden
Swed
en11 5 7 8 3 11 14 50 5
Swed
en
About the same 19 18 27 23 8 19 18 13 29 29 24 21 U
ntie
dU
ntie
dU
nite
d Worse off 66 74 41 58 79 69 71 76 51 47 21 55
Kin
gdom
Kin
gdom
Kin
gdom
Donrsquot know 9 3 9 9 9 4 4 8 9 10 6 19
Fran
ceFr
ance
Fran
ce
Chart 2 Education of 20 ndash 29 year olds by country Q Please choose from the following list the highest level of educational or professional qualification you have
Spai
nSp
ain
Spa
in
Pol
and
Pol
and
Pol
and
Hun
gary
Hun
gary
Hun
gar y
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
dU
nite
d 100 100 100 100 100 100 100 100 100
Stat
es100 100 100
Stat
esSt
ates
Less than high school graduate 2 44 6 14 1 3 2 7 1 3 Ca
nada
Cana
daC
anad
aHigh school graduate 11 33 53 23 22 22 4 41 14 21 1 2
Some college or trade school 46 2 9 9 9 19 37 14 28 20 4 33 Ch
ina
Chin
aC
hina
College degree University degree 31 15 27 30 41 43 21 33 50 46 9 57
Postgraduate degree or 8 3 3 23 25 11 36 1 8 9 80 6 qualification Ja
pan
Japa
n Ja
pan
Other 2 4 1 1 1 2 0 5 0 6 2
None 0 1 1 0 1 0 0
NET Less than undergrad degree 61 82 70 47 34 46 43 66 42 45 11 37
NET Undergrad degree or higher 39 18 30 53 66 54 57 34 58 55 89 63
Chart 3 Aegon Retirement Readiness Index scores for young employees by country
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
NET Low Index (0-5) 80 64 79 81 85 78 81 73 65 61 61 87
NET Medium Index (6-7) 15 30 18 15 14 21 17 23 25 31 31 12
NET High Index (8-10) 4 6 3 3 1 2 2 4 10 8 7 1
Appendix 2 Country comparisons Chart 1 The majority of young employees believe that they will be worse off in retirement compared to their parents Q Do you think that future generations of retirees will be better off or worse off than those currently in retirement
37 | The Young Pragmatic and Penniless Generation
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsI always make sure that 27 34 27 26 17 14 19 22 35 33 32 20 I am saving for retirement
I only save for retirement G
erm
any
Ger
man
y21 27 20 13 17 21 16 6 17 24 20 24 occasionally from time to time
I am not saving for retirement now 6 11 8 11 5 15 9 4 10 8 9 5 although I have in the past Sw
eden
Swed
en
I am not saving for retirement 35 23 34 46 53 40 49 54 36 33 38 46 though I do intend to U
nite
dU
ntie
dK
ingd
omK
ingd
om I have never saved for retirement and 11 6 10 5 8 10 6 13 3 2 1 6 donrsquot intend to
Fran
ceFr
ance
Chart 5 Younger people are more likely not to be using any means of retirement savings Sp
ain
Spai
nQ Which financial means if any are you currently using to prepare for your retirement
Pol
and
Pol
and
only asked in Germany only asked in Spain
Hun
gary
Hun
gary
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
dSt
ates
Stat
es100 100 100 100 100 100 100 100 100 100 100 100
Defined benefit plan 16 10 25 29 15 3 76 11 20 13 5 Ca
nada
Cana
daDefined contribution plan 28 10 17 19 19 14 10 23 40 7 3
Private pension 8 18 14 10 5 9 4 13 12 40 66 4 Ch
ina
Chin
a Government pension social security 12 43 14 21 8 7 4 18 27 33 71 35
Stocks 5 12 14 7 4 17 7 2 13 10 23 9
Bonds 1 8 5 6 2 16 4 2 8 13 14 3 Ja
pan
Japa
n
Mutual funds 2 14 23 4 2 10 3 4 7 16 9 6
Investment insurances (annuities) 2 3 2 3 2 9 4 5 2 4 6 1
Savings accounts 23 37 38 25 23 6 29 15 36 37 65 36
Investment property 2 10 6 7 9 2 5 2 5 11 18 1
Employee stock purchase 1 1 1 4 1 29 0 4 1 7 1
My home 10 5 8 7 7 8 4 6 6 14 30 1
Reverse mortgage 1 4 2 4
My business 2 1 3 2 2 4 1 1 2 4 12 1
Inheritance 3 11 7 11 7 9 9 8 7 9 6 2
Annuities 1 15 2 2 1 4 3 2 1 2 8
Long-term care insurance 2 1 3 2 9 5 1 6 4 7 1
Life insurance 6 11 8 8 14 3 18 15 19 18 36 17
Unterstuumltzungskasse aus 2 Eigenmitteln finanziert
Unterstuumltzungskasse vom 2 Arbeitgeber finanziert
Chart 4 Younger employees are much more likely to aspire to save for retirement Which of the following best explains your approach to saving for retirement This can include money you contribute to any long-term
investment including pensions stocks and shares investment-linked insurances property etc
Q
The Young Pragmatic and Penniless Generation | 38
Plan de empleo mixto 2 (combinacioacuten de las dos anteriores)
Other 1 6 4 0 1 2 2 3 2 2 3 3
None nothing 8 14 12 23 25 31 6 27 21 17 3 24
Donrsquot know 29 6 17 13 19 8 4 9 7 7 0 9
hart 6 The younger generation has more negative associations of retirement Which if any of the following words do you most associate with retirement
Net
herl
ands
Net
herl
ands
Ger
man
yG
erm
any
Swed
enSw
eden
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
d100 100 100 100 100 100 100 100 100 100 100 100
Kin
gdom
Kin
gdom
Freedom 35 32 36 39 19 26 11 20 35 40 37 33
Opportunity 7 27 25 18 4 8 9 10 17 16 9 16 Fr
ance
Fran
ceLeisure 58 48 36 41 23 24 43 32 50 50 55 6
Excitement 2 5 3 8 2 6 1 2 17 17 4 3 Sp
ain
Spai
nPoverty 11 26 23 11 26 14 37 44 7 5 6 20
Insecurity 34 24 18 16 20 18 35 56 10 9 18 44 P
olan
dP
olan
dLoneliness 4 10 17 16 12 7 11 8 5 9 20 12
Ill health 2 19 7 14 15 9 49 23 6 6 29 11 H
unga
ryH
unga
ryDependent on others 11 11 5 18 14 8 18 19 14 6 11 4
Tired 3 4 8 10 14 10 17 6 7 7 13 19 U
nite
dU
nite
dFar away 38 19 25 21 61 32 2 13 33
Stat
es33 14 22
Stat
es
Boredom 14 16 6 12 16 12 15 8 12 12 16 17 Ca
nada
Cana
daEnjoyment 21 16 17 23 14 29 5 3 37 37 35 15
None of the above 0 1 1 2 0 2 1 1 2 2 1 2
Donrsquot know 2 2 3 3 2 2 1 2 0 Ch
ina
6 Ch
ina
hart 7 Many young employees think they are not on course to achieve target retirement income Ja
pan
Japa
n Do you think you will achieve this income [your estimated income needed in retirement]
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
I donrsquot know if I am on course to 56 37 57 59 50 39 49 48 48 41 22 68 achieve my retirement income
No I am on course to achieve around one-quarter (25) of my 10 14 9 13 15 14 14 13 10 10 10 7 retirement income
No I am on course to achieve around 12 20 14 11 19 19 18 15 12 11 23 12 half of my retirement income
No I am on course to achieve around three-quarters (75) of my 8 14 7 4 8 15 9 8 6 11 20 5 retirement income
Yes I am on course to achieve my 15 15 13 14 8 13 11 17 25 27 25 8 retirement income
CQ
CQ
39 | The Young Pragmatic and Penniless Generation
Chart 8 Young people in most countries expect to retire before 65 Q At what age do you expect to retire from all paid employment
Net
herl
ands
Ger
man
y
Swed
en
Uni
ted
Kin
gdom
Fran
ce
Spai
n
Pol
and
Hun
gary
Uni
ted
Stat
es
Cana
da
Chin
a
Japa
n
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
40 or under 0 1 1 0 0 1 3 1 5 12
41-50 1 2 3 5 2 2 6 3 9 4 37 9
51-59 4 4 4 6 2 4 11 5 7 10 30 1
60 5 11 8 12 10 13 19 12 12 16 21 27
61-64 2 11 10 2 20 7 4 13 5 3 1 2
65 17 22 44 31 34 32 16 26 26 32 3 25
66-69 42 32 15 9 12 29 20 13 9 9 0 1
70 19 11 10 18 10 5 10 9 13 12 0 6
71+ 5 5 5 9 4 5 5 3 7 5 1 4
Never 2 1 1 2 2 2 6 4 1 0 0
Donrsquot know 2 3 2 5 3 2 8 9 5 5 1 13
Mean 67 65 65 65 64 65 63 64 63 64 53 59
Median 67 65 65 65 65 65 65 65 65 65 55 60
Chart 9 Younger employees feel they donrsquot have money to invest for retirement Q What is the single biggest obstacle to you saving for retirement right now
Net
herl
ands
Ger
man
y
Swed
en
Uni
ted
Kin
gdom
Fran
ce
Spai
n
Pol
and
Hun
gary
Uni
ted
Stat
es
Cana
da
Chin
a
Japa
n
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
The uncertain economic environment 19 8 13 9 13 19 11 14 12 9 29 27
Lack of money to invest 28 41 33 43 47 34 48 55 47 50 6 19
Fear of poor investment returns over the coming years 2 5 10 7 5 6 8 2 6 8 14 6
Complexity of investment products 4 4 4 3 5 3 5 2 12 5
I donrsquot know how to go about investing for the long-term 2 3 10 8 5 5 3 3 6 8 7 9
The fees charged by financial services companies 2 4 4 2 4 3 4 2 3 5 2 5
I canrsquot afford to take financial advice 3 3 6 8 2 4 3 5 3 2 3 2
I donrsquot trust the financial services industry 12 11 8 6 5 10 6 2 2 3 5 4
I donrsquot see the need to save for the long-term 6 1 2 2 3 3 3 1 2 1 4 3
Concerns about unstable currencies currency fluctuations 2 5 1 3 3 3 4 3 4 5 15 2
Other (PLEASE STATE) 3 3 1 1 3 2 4 6 2 2 1
Donrsquot know 17 12 11 7 8 6 3 6 8 6 3 17
The Young Pragmatic and Penniless Generation | 40
Chart 10 More money would incentivize young employees to save for retirement Q Which if any of the following would encourage you to save for retirement
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsMore generous tax breaks on long-term savings and pensions 20 44 30 32 27 23 42 42 33 43 40 32 products
Ger
man
yG
erm
any
Access to financial education so that I am more aware of what 24 6 14 21 16 22 21 12 23 24 43 25 I need to do for myself
Swed
enSw
eden
Access to professional financial advice so that I have personalized
Uni
ted
20 24 23 23 15 21 25 9 22 23 44 13 U
nite
drecommendations on what steps
Kin
gdom
Kin
gdom
I need to take
Simpler investment products that 12 33 19 28 20 Fr
ance
18 27 16 32 28 36 10 Fr
ance
I can understand with less jargon
Better and more frequent information about my retirement 16 28 20 27 27 23
Spai
n20 18 25 31 45 22
Spai
nsavings
Better legal protection in case I am 12 18 13 18 10 24 18 13 13 19 21 6 P
olan
dP
olan
dsold the wrong product
A pay rise 46 54 44 64 55 50 70 72 67 64 53 37
A better retirement plan pension H
unga
ryH
unga
ry27 32 25 33 29 26 42 35 39 44 33 32 match from my employer
Other 4 2 1 1 2 2 3 3 2 U
nite
d3 0
Uni
ted
Stat
esSt
ates
Donrsquot know 17 9 16 10 10 12 3 8 8 5 3 17
Not applicable - I already have 3 3 4 2 2 1 1 1 2 2 3 sufficient savings Ca
nada
Cana
da
Chin
aCh
ina
Chart 11 A majority of younger employees do not have a written plan for retirement Q Which of the following best describes your retirement planning strategy
Japa
n Ja
pan
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
I have a written plan 7 18 10 9 6 8 6 5 13 10 8 4
I have a plan but it is not written 24 47 37 25 23 31 29 31 37 44 55 24
down
I do not have a plan 61 32 51 61 62 55 62 58 45 42 34 61
Donrsquot know 7 3 3 5 8 6 3 6 4 4 3 12
41 | The Young Pragmatic and Penniless Generation
Chart 12 For young employees friends and family are the leading source of retirement savings information Q And which of these sources (of information) is most important to you
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
Bank adviser 6 11 19 5 25 5 7 4 3 17 10 2 N
ethe
rlan
dsN
ethe
rlan
dsProfessional financial adviser 12 22 10 12 10 19 19 22 21 25 19 10
Insurance agent spokesperson 3 10 2 3 1 3 6 2 3 0 3 2 G
erm
any
Ger
man
yInsurance company website 3 1 3 2 4 4 2 2 1 3 1
Personal finance websites online 8 5 7 8 5 4 10 8 12 6 10 8 retirement planning tools Sw
eden
Swed
enPersonal finance media 2 2 2 2 2 6 3 1 2 1 6 2
Government website 7 1 3 6 U
nite
d5 2 3 3 2 3 7 1
Uni
ted
Kin
gdom
Kin
gdom
Bank website 2 3 3 2 1 0 3 2 1 6 3 3
My employer 12 8 4 9 4 7 5 12 8 5 4 1 Fr
ance
Fran
ceAccountant 2 6 4 4 1 3 1 3 5 5 1 3
Lawyer 2 3 1 2 2 8 4 2 1 2 2 0 Sp
ain
Spai
nFriends and family 21 22 30 28 24 26 18 24 26 20 25 24
None of these P
olan
dP
olan
dNot applicable 21 7 16 18 19 13 17 15 14 9 5 41
Hun
gary
Hun
gary
Chart 13 Most young workers feel their employer should provide some kind of pension Q In the future what if anything should employers do to help people plan for retirement
Uni
ted
Uni
ted
Stat
esSt
ates
Cana
daCa
nada
Chin
aCh
ina
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 Ja
pan
Japa
n Employers should be required to 24 43 20 40 21 26 20 28 37 34 20 30 contribute to workersrsquo pensions
Employers should be required to make a pension available but not to 12 13 7 17 20 15 15 4 11 14 22 5 contribute into it
Employers should not be required to provide pensions but should 15 9 12 8 9 8 11 6 11 9 9 11 provide information on how to plan for retirement
Employers should provide a range of flexible benefits and 13 18 18 16 15 27 25 28 21 22 45 12 allow individuals to choose which benefits they actually want
Nothing ndash it should be left to individual employees to take care 2 2 5 1 4 3 3 5 6 5 1 9 of themselves
Nothing ndash it should be left to the government to take care of its 2 5 5 2 5 8 15 14 1 4 0 4 citizens
Donrsquot know 30 10 32 17 27 12 12 15 13 13 3 29
The Young Pragmatic and Penniless Generation | 42
Chart 14 Workplace pensions are relatively low down in young workersrsquo priorities when choosing a job Q How important to you would the following workplace benefits be if you were choosing your next job
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsBasic salary 86 93 88 91 88 92 90 94 90 93 96 94
Holiday entitlement 87 94 89 91 92 94 91 94 93 94 96 91 G
erm
any
Ger
man
yOvertime and bonus pay 86 93 87 88 89 90 89 94 90 91 97 90
Location of workplace 88 91 86 92 89 90 89 92 93 93 92 86 Sw
eden
Swed
enMedical health insurance 73 92 84 65 86 87 88 87 93 94 98 83
Opportunities for career progression 86 91 81 90 90 94 91 94 92 91 96 81 U
nite
dU
nite
dAccess to a workplace retirement 85 85 81 82
Kin
gdom
78 84 80 78 84 86 93 74 K
ingd
omplan with employer contributions
Access to good training provision 85 87 85 88 86 91 85 93 86 90 95 74 Fr
ance
Fran
ceFlexible working hours 79 87 58 86 81 89 81 87 91 91 92 57
Life insurance 72 75 79 69 80 82 Sp
ain
84 80 81 88 93 74 Sp
ain
(death in service benefits)
Phased retirement or other employer programs providing for 74 54 75 71 72 81 76 74 76 81 91 65
Pol
and
Pol
and
a transition into retirement
Ability to work past the normal 68 57 64 65 64 74 72 65 74 76 80 70 retirement age H
unga
ryH
unga
ry
Access to a workplace retirement 62 74 61 68 59 77 61 47 68 74 89 65 plan without employer contributions U
nite
dU
nite
dSt
ates
Stat
esEmployee share plans 50 72 54 65 59 73 61 51 64 73 91 55
Access to creche help with the 67 75 64 56 69 79 75 83 58 69 89 68 cost of childcare Ca
nada
Cana
da
Opportunities for foreign travel 53 54 60 55 50 71 58 66 57 61 79 37
Company car 51 46 45 47 49 63 51 49 36 49 69 Ch
ina
39 Ch
ina
Japa
n Ja
pan
Chart 15 Young workers think the state pension will need to be reformed Q With the cost of government pensions becoming a greater concern as people live longer which if any of the following do you think
the government should undertake
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
The government should reduce the overall cost of state pension 15 33 16 15 16 20 28 22 21 26 30 16 provision by reducing the value of individual pension plans
The government should increase overall funding available for the 12 21 30 22 14 34 19 26 21 18 29 10 state pension through raising taxes
43 | The Young Pragmatic and Penniless Generation
he government should take a alanced approach with some 27 26 12 30 28 23 24 16 34 31 38 41 eductions in individual payments nd some increases in tax
he government should not do nything State pension provision 7 2 12 5 3 4 3 3 5 4 0 5 ill remain perfectly affordable in he future
onrsquot know 38 19 29 29 39 20 26 34 19 21 4 28
Net
herl
ands
art 16 Products which protect against investment risk are the most important to young workers ( interested) Thinking about the types of financial products you could purchase to help provide you with security in retirement on a scale of 1 to 5
how interested are you in the following options G
erm
any
Swed
en
Uni
ted
Kin
gdom
ase 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 Fr
ance
100 100 100 100 100 100 100 100 100 100 100 100
product providing a guaranteed etirement income stream or 75 81 73 76 74 83 78 76 87 85 94 69
Spai
nifetime income in retirement
product which protects my 74 79 73 76 72 82 77 74 84 86 94 65 etirement income against inflation P
olan
d
product which guarantees that I 72 82 73 78 75 81 76 73 86 86 90 67 onrsquot lose my initial investment H
unga
ry product which helps meet the ost of long-term care if I become 74 79 74 77 70 79 76 71 86 85 84 66
Uni
ted
nable to look after myself St
ates
product which protects my capital 71 81 71 76 68 76 77 73 84 83 93 65 rom poor investment returns Ca
nada
product which generates a etirement income and allows 69 78 71 75 68 81 77 72 84 86 94 70 e to take a lump sum from the
Chin
anvestment should I need to
product where the annual 66 78 68 75 72 79 77 70 85 86 87 64 anagement charges are kept low Ja
pan
product which enables me to eep some control over how my 71 73 70 75 72 80 75 69 88 85 91 63 avings are invested during my etirement
product which manages the sset allocation so that I am never 68 70 67 73 66 76 71 67 80 83 95 60 xposed to a level of risk Irsquom not omfortable with
product which continues to rovide a retirement income to my 74 78 71 75 73 81 79 73 86 82 94 60 pouse in the event that I die first
product which protects my family gainst having to pay estate taxes 73 76 71 74 75 81 75 69 82 82 89 56 hen I die
product which locks in investment 72 71 63 73 64 71 59 56 81 84 89 61 eturns during the good years
Tbra
Tawt
D
ChQ
B
Arl
Ar
Ad
Acu
Af
Armi
Am
Aksr
Aaec
Aps
Aaw
Ar
The Young Pragmatic and Penniless Generation | 44
Part 2 The savings outlook of young employees This chapter explores the financial behaviors and savings gaps and needs of 20-29 year olds through their attitudes toward financial issues the wider economy and the savings required for a comfortable retirement
The Young Pragmatic and Penniless Generation | 12
75
21
4
69
27
4
64
31
4 5
7
36
7
20-29
30-39
40-49
50-59
44
40
16
NET Low Index (0-5)
NET Medium Index (6-7)
NET High Index (8-10)
60-69
Retirement readiness and young employees However many young employees have concerns about achieving
Retirement is seen as a major life stage by young employees this Over a third (38) are pessimistic that they will not have
They typically expect to spend an average 20 years of their lives enough to live on in retirement and 44 are pessimistic about
in retirement a definition of retirement that is consistent across being able to choose when they retire Furthermore 28 have
all working age groups Retirement conjures broadly positive made no plans at all for their retirement which may help explain
associations Fully 63 of employees in their twenties aspire some of these concerns Health worries are less of an issue with
to travel during retirement 39 see it as a period of leisure 52 being optimistic that they will enjoy good health in old age
and 30 associate it with freedom The need to plan and save although 20 believe that they will not which is perhaps related
for this phase of life is also widely accepted Half (50) of to the 17 who associate retirement with ill health in general
employees in their twenties are aware of the need to save and
64 feel a high or very high degree of personal responsibility Overall 75 of employees in their twenties achieved a low
to ensure sufficient income for retirement retirement readiness score of 0-5 on the Aegon Retirement
Readiness Index (please refer to the glossary and Appendix 1 for
an explanation of the Index) The percentage of employees with a
low score of 0-5 drops with each increase in age group and is 44
among those in the lsquoat retirementrsquo group of 60 to 69 year olds
Chart 6 Aegon Retirement Readiness Index scores for employees across age groups For more information on the ARRI see page 36
Base All aged 20 - 69
Life stage and savings attitudes Getting married and starting a family are two such events
he Retirement Readiness Index reveals that retirement Of employees in their twenties 25 are married and
reparedness is to some extent age- and life stage-related 25 have children whereas for those in their 30s 54 are
hart 6) For younger employees the idea that retirement is married and 56 have children representing a major shift
r awayrsquo combined with lower earnings and other spending toward parenthood
riorities (such as higher education or purchasing a house)
an be powerful obstacles to saving for retirement Thus while Encouragingly while young employees are less likely to
5 of all employees say that they lsquoalways make surersquo that they have started saving for retirement many see themselves as
re saving for retirement just 25 of 20-29 year olds do so future lsquoaspiringrsquo savers Fully 41 intend to save in the future
t present over half (57) of 20-29 year olds are not saving compared to 27 of all employees and only 7 do not intend
r retirement compared to 46 of all employed adults to save for retirement This large group of aspiring savers
ven in China where 44 are always saving for retirement who are committed to the idea of putting money aside for
st 32 of 20-29 year olds do so retirement challenges the view that young people are unwilling
to save Furthermore since converting these young employees
his life cycle effect can be seen in numerous ways At the from aspiring savers to regular savers may depend on the
utset of adult life employees experience lower income and right economic conditions and appropriate financial incentives
igher spending as they prioritize and fund life events with a helping them is a major opportunity for governments and
ignificant impact on their ability or desire to save for retirement employers
T
p
(C
lsquofa
p
c
3
a
A
fo
E
ju
T
o
h
s
13 | The Young Pragmatic and Penniless Generation
35 25 20 19 12 9 27 41 7 7
I always make sure I only save for I am not saving for I am not saving for I have never saved that I am saving retirement occasionally retirement now although retirement though for retirement and for retirement from time to time I have in the past I do intend to donrsquot intend to
All 20 to 29 year olds
NET Low Index (0-5)
NET Medium Index (6-7)
NET High Index (8-10)
Chart 7 Younger employees are much more likely to aspire to save for retirement but the majority are not saving Q Which of the following best explains your approach to saving for retirement This can include money you contribute to any
long-term investment including pensions stocks and shares investment-linked insurances property etc
Other findings support the assertion that younger savers This can be seen in Chart 8 More 20-29 year olds claim that
are open to increasing their retirement savings Over a third they are not likely to be saving for retirement by any means
(37) of 20-29 year olds feel lsquovery responsiblersquo for ensuring (17 against 12 for all adults) and are generally less likely
a sufficient retirement income Note however that this does to use any of the savings products mentioned Revealingly
not translate into better developed financial plans and savings 20-29 year olds are far less likely to name lsquogovernment benefits
strategies Only 7 in this age group feel they have lsquowell in retirementrsquo as a source of retirement income although almost
developedrsquo personal retirement plans and 33 say they are all respondents have some such entitlement This may be due
lsquohardly saving anythingrsquo for retirement Clearly awareness of the to unawareness of government benefits and or greater
retirement situation does not translate into actual retirement scepticism about governmentsrsquo ability or willingness to
planning activity provide for them in old age
The Young Pragmatic and Penniless Generation | 14
Chart 8 Younger people are more likely not to be using any means of retirement savings Q Which financial means if any are you currently using to prepare for your retirement
33 Savings accounts 31
36 Government pension social security 24
25 Defined benefit plan 21
22 Private pension 17
23 Defined contribution plan 15
20 Life insurance 15
14 Stocks 10
14 My home 9
12 Mutual funds 8
9 Inheritance 7
9 Bonds 7
8 Investment property 7
5 Employee stock purchase 5
5 Investment insurances (annuities) 4
4 Long-term care insurance 4
6 Annuities 3
My business 2 3
Reverse mortgage 1 1
Other 3 2
12 None nothing 17
6 Donrsquot know 10
All 20 to 29 year olds
Leisure
Freedom
Far away
Insecurity
Enjoyment
Poverty
Ill health
Boredom
Opportunity
Dependent on others
Loneliness
Tired
Excitement
None of the above
Donrsquot know
Retirement associations What does the younger generation feel about retirement and want to get out of it Perhaps unsurprisingly 20-29 year olds are more
likely to be negative than older respondents associating retirement with boredom loneliness and ill health They are also far more
likely to believe retirement is lsquofar awayrsquo which is likely to be a barrier to retirement saving
15 | The Young Pragmatic and Penniless Generation
Chart 9 The younger generation has more negative associations with retirement Q Which if any of the following words do you most associate with retirement
44 Leisure 39
36 Freedom 30
17 Far away 26
25 Insecurity 25
25 Enjoyment 21
19 Poverty 19
15 Ill health 17
9 Boredom
13
16 Opportunity
13
10 Dependent on others
12
9 Loneliness
11
0
r olds
7Tired
1
6Excitement
6
2None of the above
1
2Donrsquot know 2
All 20 to 29 yea
Aspirations and responsibilities for retirement Income levels in retirement ung people have similar retirement aspirations to the general A high proportion (47) do not know if they are on course
pulation for example travel (63) spending time with to achieve their retirement income goal Combined with the
iends and family (61) and pursuing new hobbies (52) high level of financial responsibility young employees expect
r them however retirement also includes the responsibility of to assume in retirement it is clear that people not only need
ring for others Two-fifths (40) believe that lsquoadult children to build much greater awareness of what kind of financial
retirees should help through providing financial support to pressures they are likely to face in retirement but also require
eir parents if neededrsquo and 28 believe that this will affect greater support in establishing realistic retirement income
em directly in retirement through providing financial support targets which are capable of meeting their needs
their parents A fifth (21) also expect to spend some of
eir retirement caring for other family members while just
donrsquot expect to provide for anyone compared to 40 of all
ployees Clearly todayrsquos young employees anticipate serious
ancial responsibilities in their retirement
Yo
po
fr
Fo
ca
of
th
th
to
th
30
em
fin
The Young Pragmatic and Penniless Generation | 16
Chart 10 Many young employees do not think that they are on course to achieve target retirement income Q Do you think you will achieve this income [your estimated income needed in retirement]
Base 20-29 year olds
Yes I am on course to achieve my retirement
income
16
47
12
16
10
I donrsquot know if I am on course to achieve my
retirement income
No I am on course to achieve around
one-quarter (25) of
No I am on course to achieve around half of my
retirement income
No I am on course to achieve around
three-quarters (75) of my retirement income
532
China
586
Japan
United S
tate
s
628
Poland
635
Canad
a
636
Hunga
r
638
y
Fran
ce
645 647
Spain
Sweden
649
United K
ingdom
651
Germ
any
653
Nether
lands
666
my retirement income
When will young people retire Media reports about the need to raise the age of retirement appear to have influenced younger employees Fully 44 of 20-29 year
olds do not expect to be able to choose their retirement date although the younger generation do expect to retire at a similar age
to older employees 63 This varies considerable by country In the Netherlands young employees expect to retire eight years later
than those in Japan Some countries such as China and Japan have surprisingly low expected retirement ages suggesting that young
employees may benefit from having a better understanding of when government or workplace retirement benefits kick in
Chart 11 Young people in most countries expect to retire before 65 Q At what age do you expect to retire from all paid employment
Base 20-29 year olds
Despite expecting to retire at the same age as their parents younger employees are more open to a transition into retirement
reflecting their more flexible outlook toward work Around half (51) are happy to change the way they work in some way as they move
into retirement Just 8 expect to keep working as they do currently
17 | The Young Pragmatic and Penniless Generation
Part 3 What is holding young employees back Insights into what young employees feel is holding them back from saving or saving more can be used to encourage younger people to adopt more positive savings behaviors This chapter explores the attitudes of young employees toward the financial obstacles they face and asks what actions they have taken in preparation for retirement The findings reveal that while the majority lacks adequate planning for their retirement needs financial shortcomings are only part of the stor y Spending preferences play a key role in the savings gap of advanced economies
The Young Pragmatic and Penniless Generation | 18
Lack of money to invest 37
16 The uncertain economic environment
7 Fear of poor investment returns over the coming years
6 I donrsquot trust the financial services industry
6 I donrsquot know how to go about investing for the long-term
4 oncerns about unstable currencies currency fluctuations
4 Complexity of investment products
4 I canrsquot afford to take financial advice
3 The fees charged by financial services companies
3 I donrsquot see the need to save for the long-term
Other 2
Donrsquot know 8
A pay rise
More generous tax breaks on long-term savings and pensions products
A better retirement plan pension match from my employer
Better and more frequent information about my retirement savings
Simpler investment products that I can understand with less jargon
Access to professional financial advice so that I have personalized recommendations on what steps I need to take
Access to financial education so that I am more aware of what I need to do for myself
Better legal protection in case I am sold the wrong product
Other
Not applicable - I already have sufficient savings
Donrsquot know
Obstacles and incentives to saving
Chart 12 Younger employees feel they donrsquot have money to invest for retirement Q What is the single biggest obstacle to you saving for retirement right now
Base 20-29 year olds
C
What is the single biggest obstacle preventing twentysomethings that they rank pressing and desirable life goals such as marriage
m saving for retirement Not having enough money to invest starting a family vacations and other leisure activities above the
top of the list cited by over a third (37) although this figure need to plan for retirement This suggests the savings gap is
ops to just 6 in the emerging market of China where mean preference-driven
omes are the lowest by far ($18000) suggesting that lack of
sh may be partly a state of mind Young employees in China The biggest obstacle to retirement savings cited by one-eighth
actually more worried about local concerns such as economic (13) of respondents is either not knowing how to invest for the
certainty (29) and currency instability (15) Behavioral long-term or the complexity of investment products charges and
ance has an impact too with the way young employees frame fees Ready solutions to this include improving young employeesrsquo
eir financial priorities creating its own obstacles to saving financial literacy about retirement planning and creating easier
many as 57 of 20-29 year olds believe that saving for access to professional financial advice
tirement is important but not a current priority suggesting
fro
is
dr
inc
ca
are
un
fin
th
As
re
19 | The Young Pragmatic and Penniless Generation
Chart 13 More money would incentivize young employees to save for retirement Q Which if any of the following would encourage you to save for retirement
Base 20-29 year olds
57 A pay rise
More generous tax breaks on long-term savings and pensions products
34
A better retirement plan pension match from my employer
33
Better and more frequent information about my retirement savings 26
Simpler investment products that I can understand with less jargon 24
Access to professional financial advice so that I have personalized recommendations on what steps I need to take 23
Access to financial education so that I am more aware of what I need to do for myself 22
Better legal protection in case I am sold the wrong product 16
Other 2
Not applicable - I already have sufficient savings 2
Donrsquot know 10
Chart 14 Very few younger employees have a written plan for retirement Q Which of the following best describes your retirement planning strategy
Base 20-29 year olds
5 Donrsquot know I have a
written plan
8
34 I have a plan but it is not
52 written down
I do not have a plan
Turning to incentives greater remuneration predictably tops a list Retirement planning of what would encourage 20-29 year olds to save for retirement Retirement planning is essential to adequate retirement saving
More tellingly a third (33) would like their employer to provide although it is somewhat lacking in todayrsquos younger employees
a better retirement plan into which both parties contribute Over half (52) have no retirement planning strategy at all
Better information and simple products would also help more and only 8 have noted down their retirement strategy
people to save A quarter (26) would be encouraged to save by
better and more frequent information about retirement savings Nevertheless the respondents polled believe that the current
while a similar number (24) want simple investment products global economy makes retirement planning increasingly
that are easy to understand As with the previous question a important ndash 71 agreed with this statement It is clear from this
lack of investment knowledge and the complexity of investment that young people between the ages of 20 and 29 do not lack
products are revealed as obstacles to savings the will to save they lack the opportunity
The Young Pragmatic and Penniless Generation | 20
Part 4 Creating the right conditions for young employees to save How may young employeesrsquo obstacles to saving be overcome For retirement readiness this will be a defining question of the early twenty-first centur y ndash and an extremely challenging one given the number of serious issues affecting younger employeesrsquo finances What was learned in the previous chapter about encouraging young employees to save is a start This chapter examines which areas and triggers to saving can be unlocked and whether government employer or individual should take most responsibility
21 | The Young Pragmatic and Penniless Generation
Friends and family
Professional financial adviser
17
24
Bank adviser 9
Personal finance websites online retirement planning tools
My employer
Government website
4
8
7
Insurance agent spokesperson
Accountant
3
3
Personal finance media 3
Lawyer
Bank website
3
2
Insurance company website
Donrsquot know
2
15
Information and advice on retirement saving strong theme revealed by our findings is that younger This finding is remarkably consistent across the countries
mployees want more information on savings products and sur veyed despite significant differences in market makeup
etter access to advice The largest share 24 (compared although some differences exist For instance a quar ter
o 17 for all employees) finds friends and family to be the (25) of young employees in France turn to bank advisers
ost important source of advice followed by professional for financial information nearly triple the number among all
dvisers (17) and bank advisers (9) That young employees young people (9)
urn to friends and family first suggests an unmet need for
rofessional financial advice This is both a challenge and an
pportunity for the financial ser vices sector
hart 15 For young employees friends and family are the leading source of retirement savings information Which of these sources (of information) is most important to you
ase 20-29 year olds
A
e
b
t
m
a
t
p
o
CQ
B
What is the role of the workplace in retirement planning Does this influence what retirement benefits younger
In response to shifting employment patterns todayrsquos younger employees expect from their workplace Certainly a majority
employees are less loyal to their employers than older workers favor workplace retirement plans with 61 believing that these
Fully 39 of 20-29 year olds are planning to look for a new job should be a fundamental part of pay (although this is lower
in the next 12 months compared to 29 of all workers and than for employees overall) and just 4 feel that retirement
31 frequently think about quitting their jobs Strikingly while planning should be left entirely to individuals
53 of all workers plan to stay with their current employer
until retirement just 37 of 20-29 year olds say this However there is evidence of a slight shift in perceptions
Younger workers are less likely to want workplace retirement
Doubtless much of this is because younger workers are more plans over other factors Of those who want employer
mobile and have more opportunities Another trigger to lower retirement plan contributions only 46 wanted this even if
employer loyalty may be the expectation of holding more jobs it reduced benefits and 35 (compared to 43 of all workers)
and even pursuing multiple careers over a working lifetime if it cut jobs
The Young Pragmatic and Penniless Generation | 22
Donrsquot know Employers should be
required to contribute to workersrsquo pensions
5 Nothing ndash it should be left to the government to take 18
care of its citizens 28
4 Nothing ndash it should be left to individual employees to
take care of themselves
13
22
Employers should provide a range of flexible benefits
and allow individuals to choose which benefits they
actually want
10 Employers should
be required to make a pension available but not
to contribute into it
Employers should not be required to provide pensions but should
provide information on how to plan for retirement
Chart 16 Most young workers feel that their employer should provide some kind of pension Q In the future what if anything should employers do to help people plan for retirement
Base 20-29 year olds
Are other workplace benefits more important Younger workers were asked to rate the importance of various workplace benefits The results reveal how highly they value the
elements of their compensation package Chart 17 shows that 87 of young employees believe a workplace retirement plan with
employer contributions would be an important factor when choosing their next job While retirement may be decades away for
twentysomethings 80 believe programs provide for a phased retirement are important
23 | The Young Pragmatic and Penniless Generation
Basic salary 94
93 Holiday entitlement
91 Overtime and bonus pay
91 Location of workplace
88 Medical health insurance
87 Opportunities for career progression
Access to a workplace retirement plan with employer contributions 87
Access to good training provision 86
Flexible working hours 85
Life insurance (death in service benefits) 81
Phased retirement or other employer programs providing for a transition into retirement 80
Ability to work past the normal retirement age 70
Access to a workplace retirement plan without employer contributions
67
Employee stock plans 65
Access to creche help with the cost of childcare 59
Opportunities for foreign travel 50
Company car 43
Chart 17 Workplace retirement plans are a relatively low priority for younger workers when choosing a job How important to you would the following workplace benefits be if you were choosing your next job
ase 20-29 year olds
Q
B
Regarding workplace benefits provided by employers today considered just enough to fulfill basic needs and in China a
young employees are about as likely as all workers to be offered fully formed nationwide retirement system is still some way off
retirement tools such as annual plan statements and online The future shape and affordability of these plans is debated in
tools from their employer though it is concerning that 24 do all of the sur vey countries to var ying degrees
not know if such tools are available or not Those provided are
considered helpful Younger workersrsquo views on reform are important because
changes to government retirement benefits are more likely
The role of government to affect them than any other part of the working population
The generosity of government retirement benefits varies The main concern cited by 57 is of facing less generous
considerably in the countries sur veyed In some countries such government retirement benefits than those enjoyed by their
as France government benefits are the primar y mechanism parentsrsquo generation
for funding retirement while in the United Kingdom they are
The Young Pragmatic and Penniless Generation | 24
The government should reduce the overall cost of state pension provision by
reducing the value of Donrsquot know individual pension plans
25 22
4 The government should not do anything State pension provision will
remain perfectly affordable in the future
28
21 The government should increase overall funding
available for the state pension through
raising taxes
The government should take a balanced approach with some reductions in individual payments and
some increases in tax
Chart 18 Young workers think that the government retirement system will need to be reformed Q With the cost of government retirement benefits becoming a greater concern as people live longer which
if any of the following do you think the government should undertake
Base 20-29 year olds
The younger generation believes that the government cannot What do young employees look for in a retirement product continue to provide as it does now ndash just 4 think government The sur vey findings show that young employees have
benefits will remain affordable to society However there is no reser vations about employer and government retirement
consensus on what governments should do to reform retirement benefits So what then do they want from a private savings
plan systems Over a fifth (22) think retirement entitlements product The savings product feature most valued by younger
should be cut just over a fifth (21) think governments should workers is protection against investment risk (Char t 19)
raise taxes and more than a quarter (28) think a mixture of This may be in the form of no loss of initial investment a
the two is the best solution Another quarter admits that they guaranteed income stream or protection against inflation
donrsquot know what should be done This is reasonable ndash the initial investment of those farthest
from retirement is most at risk However less consideration
is given to savings grow th through investment returns This
suggests that there is an oppor tunity to educate young
workers about the trade-off between returns and risk
management and what they stand to gain
25 | The Young Pragmatic and Penniless Generation
Chart 19 Products which protect against investment risk are the most important to young workers ( interested) Q Thinking about the types of financial products you could purchase to help provide you with security in retirement on a scale of 1 to 5
how interested are you in the following options
Base 20-29 year olds
A product providing a guaranteed retirement income stream or lifetime income in retirement 82
A product which protects my retirement income against inflation 81
A product which guarantees that I donrsquot lose my initial investment 81
A product which helps meet the cost of long-term care if I become unable to look after myself 80
A product which protects my capital from poor investment returns 79
A product which generates a retirement income and allows me to take a lump sum from the investment should I need to 79
A product where the annual management charges are kept low 78
A product which enables me to keep some control over how my savings are invested during my retirement 77
A product which manages the asset allocation so that I am never exposed to a level of risk Irsquom not comfortable with 76
A product which continues to provide a retirement income to my spouse in the event that I die first 75
A product which protects my family against having to pay estate taxes when I die 72
A product which locks in investment returns during the good years 70
The lsquodefined ambitionrsquo retirement system in This removes some of the disadvantages of leaving
the Netherlands a sustainable retirement solution retirement liabilities exclusively up to employers
for young workers (defined benefit) or employees (defined contribution)
In the Netherlands as elsewhere young workers are faced In the Netherlands this is likely to involve legislation which
with an increasing retirement age decreasing government lets retirement funds automatically adjust pay-outs and
suppor t for retirement and declining traditional defined retirement age as life expectancy changes xii
benefit employer retirement plans Reforms proposed
by the Dutch may show a way for ward for all mature and This model has garnered interest elsewhere In the
aging economies United Kingdom Pensions Minister Steve Webb expressed
interest on a more limited scale with a government
rsquoDefined ambitionrsquo proposes that risks are not taken on fully guarantee for a minimum rate of return for defined
by either employer or employee but are shared contribution retirement plans
The Young Pragmatic and Penniless Generation | 26
Recommendations Enabling young workers to save The studyrsquos findings reveal that the majority of young workers (66) are either saving consistently or aspire to start saving but face challenges including debt low pay and funding for significant life events and generational changes to the economic landscape and government and employer support If young people are to achieve a prosperous retirement their willingness to save should be met with better opportunities to save Here is what can be done by employers governments and young people themselves to address retirement planning concerns for younger adults
27 | The Young Pragmatic and Penniless Generation
Individuals Employers and governments
Determine how much income you need in retirement Auto-enroll employees into a workplace retirement plan Young people accept the need to save for retirement but donrsquot If an auto-enrollment workplace retirement plan is feasible
know how to act on that need They can become more retirement this can play a major role in getting young workers saving early
savvy simply by talking to friends and family (as do 24 of and regularly Combined with auto-escalation (the automatic
our respondents already) or employers going online to use annual increase in retirement plan contributions) and matching
retirement calculators or reading the personal finance media contributions it can lead to greater retirement readiness
Seek out a financial advisor Provide more flexible savings products through the workplace Young people are faced with life events that make it easy to Not all savings journeys start with a retirement plan particularly
feel overwhelmed by financial priorities in addition to retirement for young people who may think of retirement as lsquotoo far awayrsquo
planning Soliciting advice from a finance professional early in Employers can kick-start the savings habit in younger workers
life (17 of young employees have done so already) helps with by providing flexible easy to access and easy to understand
planning and priorities and making sense of long-term finances savings plans as a more attractive starter option
Start saving now and save consistently Make company retirement plans more portable As with all employees young people will strengthen their Young people move jobs much more often than previous
retirement readiness simply by saving regularly Today only 25 generations of employees so savings like DC retirement plans
of young people always save yet even small regular amounts need to follow employees when they change jobs
will improve retirement readiness over time
Make tax incentives more effective Ask your employer about workplace retirement savings plans All countries encourage long-term savings through tax relief but
and other retirement benefits young people often arenrsquot aware of this or donrsquot understand it
While one third (33) of young people believe that a workplace A more targeted system of tax relief could help provide clearer
retirement savings plan provides a major opportunity to start and simpler signals to younger people about the financial
saving employers often experience difficulties in engaging benefits of long-term saving
younger employees in discussions about retirement planning
The workplace is an important channel for achieving retirement Make better financial education central to the workplace readiness so be sure to max out on any employer contributions retirement offer
Young people who aspire to save may be prevented from
doing so by setting the wrong financial priorities Workplace
retirement education ndash alongside professional advice ndash can help
guide young people toward the right long-term priorities at an
earlier age in life
The Young Pragmatic and Penniless Generation | 28
29 | The Young Pragmatic and Penniless Generation
Glossary
Aegon Retirement Readiness Index (ARRI) c areer average retirement plan The ARRI assesses the relative levels of retirement A type of defined benefit plan that is based on an
preparedness of employees across different countries on a employeersquos average retirement earnings over the duration
scale from 1 to 10 The Index is based on three questions of plan membership Same as average salary plan
covering attitudes and three questions covering behaviors
defined ambition (DA) plan average salary plan A type of retirement plan in which retirement plan risks
A type of defined benefit plan that is based on an are shared between the employer and the employee
employeersquos average retirement earnings over the duration It offers greater certainty to savers around the final value
of plan membership Same as career average plan of their retirement assets than in DC plans and less
cost volatility for employers than with DB plans In the
a nnuity Netherlands Defined Ambition (DA) retirement plans are
A form of contract sold by life insurance companies that being introduced in order to help relieve the pressure on
guarantees a fixed or variable payment to the annuitant employers while still trying to provide employees with a
at some future time usually retirement All capital in the more secure retirement plan The United Kingdom too is
annuity grows tax-deferred looking at DA retirement plans as a solution
auto enrollment defined benefit (DB) plan An employer-sponsored retirement plan in which the An employer-sponsored retirement plan where the amount
employer is able to enroll an employee without that of future benefits an employee will receive from the plan is
employeersquos express authorization The employer determines defined typically by a formula based on salary history and
what percentage of the employeersquos salary or wages is years of service The amount of contributions the employer
contributed to the plan The employee is able to change is required to make will depend on the investment returns
this percentage and can opt out of enrollment in the plan experienced by the plan and the benefits promised
Contrast defined contribution plan
a uto-escalation A feature of a plan which automatically increases the defined contribution (DC) plan percentage of (retirement) funds saved from salary An employer-sponsored retirement plan such as a 401(k)
This feature generally uses a default or standard plan or a 403(b) plan in the United States in which
contribution escalation rate contributions are made to individual participant accounts
Depending on the type of DC plan contributions may be
B aby Boomers made by the employee the employer or both
A term used to refer to people generally born between
the end of World War II in 1945 and the mid 1960s The employeersquos benefits at retirement or termination of
Other generations Silent Generation - the generation born employment are based on the employee and employer
between 1925 and 1945 Generation X - the generation contributions and earnings and losses on those
born between 1965 and 1979 Millennials or Generation contributions See also 401(k) and 403(b) plan
Y - the generation born between 1980 and 2000 and often Contrast defined benefit plan
classified as the children of Baby Boomers
The Young Pragmatic and Penniless Generation | 30
401(k) plan An employer sponsored retirement plan that enables
employees to make tax-deferred contributions from their
salaries to the plan
403(b) plan An employer-sponsored defined contribution plan that
enables employees of universities public schools and
non-profit organizations to make tax-deferred contributions
from their salaries to the plan
final salary plan A type of defined benefit plan in which retirement
benefits are based on final retirement salary in the years
immediately before retirement benefits are received
Millennials A term used to refer to the people born from about 1980
to 2000 brought up using digital technology They are
often classified as the children of Baby Boomers
r etirement (or pension) plan Provides replacement for salary when a person is no
longer working due to retirement In the case of a defined
benefit retirement plan the employer or union contributes
to the plan which pays a predetermined benefit for the
rest of the employeersquos life based on length of service and
salary Payments may be made either directly or through
an annuity Retirement plan payments are taxable income
to recipients in the year received The employer or union
has fiduciary responsibility to invest the retirement plan
funds in stocks bonds real estate and other assets earn
a satisfactory rate of return and make payments to retired
workers Retirement plan funds holding trillions of dollars
are one of the largest investment forces in the stock
bond and real estate markets If the employer defaults in
the United States retirement plan payments are usually
guaranteed by the Pension Benefit Guaranty Corporation
(PBGC)
variable annuities (VA) An insurance contract in which the insurance company
guarantees a minimum payment at the end of the
accumulation period The payments may vary depending
on the financial performance of the managed portfolio
31 | The Young Pragmatic and Penniless Generation
About Aegon Transamerica Center for Retirement Studiesreg and Cicero Consulting
Aegon Transamerica Center Aegon is an international life insurance pensions and asset reg management company with businesses in over 20 markets for Retirement Studies in the Americas Europe and Asia Aegon companies employ The Transamerica Center for Retirement Studiesreg (TCRS) is
around 24000 people and serve millions of customers a division of the Transamerica Institute a nonprofit private
worldwide foundation TCRS is dedicated to educating the public on
wwwaegoncom emerging trends surrounding retirement security in the
United States TCRSrsquo research emphasizes employer-sponsored
In 2010 Aegon became a founding member of the Global retirement plans issues faced by small to mid-sized companies
Coalition on Aging which seeks to raise awareness of aging and their employees and the implications of legislative and
issues among policymakers and the general public A major aim regulatory changes Transamerica Institute is funded by
of the coalition is to transform the way we think and speak contributions from Transamerica Life Insurance Company and
about aging replacing the familiar rhetoric of lsquoproblemsrsquo with its affiliates and may receive funds from unaffiliated third-
a more positive discussion of lsquopossibilitiesrsquo and lsquoopportunitiesrsquo parties For more information about TCRS please refer to
wwwglobalcoalitiononagingcom wwwtransamericacenterorg
Cicero Consulting A leading consultancy firm serving the banking insurance and
asset management sector Cicero specializes in public policy
and communications consulting as well as global thought
leadership and independent market research Cicero was
established in 2001 and now operates from offices in London
Brussels Washington and Singapore As a market leader in
pensions and retirement research Cicero designed
and analyzed the research and contributed to the report
wwwcicero-groupcom
The Young Pragmatic and Penniless Generation | 32
Marta acebo Mark Green Patricia Plas
Paula alvarez douGlas henck scott roane
Frits bart wendel hoFMan thurstan robinson
Grace basile
lynette belFry
andrew berwick
Frans van der horst
tatsuo kai
herMan kaPPelle
Patti rowey
sarah russell
Joost van schaGen
robin boon Gaacutebor kePecs dick schiethart
bert-JaaP brons Marco keiM erik schouten
douG brooks
libby buet
kent callahan
JaiMe kirkPatrick
bas knol
roGer koch
anGela seyMour Jackson
kate sMith
renske stoker
Jeanne de cervens
dana chen
Peter kunkel
alexander kuiPers
eyleen sun
MartiJn tans
arkadiusz chMurzynski
heidi cho
brian lewis
Mike linder
GreG tucker
Mark twiGG
siMon clow siMon luke catherine wanG
robert colliGnon Jason Ma Marc van weede
catherine collinson GrzeGorz Mathea tiM willaert
wendy daniels
Michel denizot
edit drevenka
Paul Middleton
takaoh MiyaGawa
david Moulton
daniel wriGht
alex wynaendts
MacieJ zaPala
Jan driessen
kelly Fu
adrian Grace
Mark Mullin
Marcelle noltenius
stiG nybo
Peacuteter zatykoacute
vicky zeldin
Disclaimer This repor t contains general information only and does
not constitute a solicitation or offer No rights can be
derived from this repor t Aegon its par tners and any of
their affiliates or employees do not guarantee warrant
or represent the accuracy or completeness of the
information contained in the repor t
Acknowledgements
33 | The Young Pragmatic and Penniless Generation
References and notes i For a comparison of different retirement systems see lsquoPensions at a Glance 2011rsquo OECD 2011 ii As the survey was carried out online the survey results in China are based toward people living in urban areas iii ldquoPensions Marketsrdquo TheCityUK March 2013 p9 iv Global Employment Trends for Youth 2013 A generation at risk International Labour Organisation 2013 p2 v Eurostat July 2013 vi OECD Employment and Labour Markets Key Tables from OECD No 2 2012 vii The Federal Reserve Bank of New York 2012 Quarterly Report on Household Debt March 29 2013 viii World Bank ix lsquoWorld-class povertyrsquo The Economist February 27 2013
httpwwweconomistcomblogsanalects201302chinas-poor x lsquoThe Chinese slow down in char tsrsquo The Economist July 15 2013 xi lsquoChina rsquos welfare system difficult inflexible and blatantly unfairrsquo The Guardian April 23 2013
httpwwwtheguardiancomglobal-development2013apr23china-welfare-system-inflexible-unfair xii lsquo The Dutch experience with Defined Ambition pensions and the impact on companiesrsquo Aegon Global Pensions March 12 2013
httpwwwaegonglobalpensionscomenHomePublicationsNews-archiveNewsThe-Dutch-experience-with-Defined
Ambition-pensions-and-what-that-may-mean-for-companies-in-the-Netherlands-and-the-UK
shy
The Young Pragmatic and Penniless Generation | 34
Contact information HE ADQUARTER S
Aegon NV
PO Box 85
2501 CB The Hague
Telephone +31 70 344 32 10
w w waegoncom
MEDIA REL ATIONS
Telephone +31 70 344 89 56
Email gcc-iraegoncom
Countr y Index score
Germany 548
China 541
Canada 524
United States 519
The Netherlands 488
United Kingdom 486
Sweden 483
France 475
Hungar y 473
Poland 463
Spain 440
Japan 430
Total 489
Appendix 1 Aegon Retirement Readiness Index (ARRI) - technical note
Aegon Retirement Readiness Index (ARRI)-technical note 2013 Weightings (2012 in brackets) A sample of 12000 pre and post retirees was drawn from 1 Personal responsibilit y 20 (30)
twelve countries Of these 10800 (90) were pre-retirees 2 Level of awareness 30 (35)
and these were chosen for fur ther analysis of their plans 3 Financial capability Understanding 30 (25)
for retirement The Index that was developed forms an 4 Retirement planning 50 (50)
assessment of how well an individual perceives the adequacy 5 Financial preparedness 60 (60)
of his her own finances and financial awareness specifically 6 Income replacement 35 (35)
for addressing his retirement needs
Note that the weights devised to show the relative
The lsquotargetrsquo for the Index impor tance of each question in calculating the Index add to
The question on current savings activity was designated as the 225 These were then re-scaled so that a final scale of 1 to
target question (dependent variable) for predicting the level of 10 was calculated
preparedness for retirement Responses to this question were
then correlated with each of the six key questions (variables) Final scores by country below to understand which were driving the activity These weightings were multiplied by the actual scores for each
This was done because it was not felt to be correct to give respondent for each of the six Index questions and aggregated
each of the six variables described below an equal weight as to obtain a provisional score This was then adjusted to
they appeared to have quite different relationships to the give countr y scores out of 1 to 10 (A score of 1 to 10 had
target question sufficient differentiation to be used as the scale for analysis)
1 Personal responsibilit y for income in retirement
2 Level of awareness of need to plan for retirement
3 F inancial capability Understanding of financial matters
regarding plans for retirement
4 Retirement planning Level of development of plans
5 Financial preparedness for retirement
6 Income replacement Level of projected income replacement
The weighting To estimate the statistical significance of the decline in overall
scores in this yearrsquos Index is theoretically incalculable
Two things have changed from 2012 to 2013
1 C anada and China have joined the sample
2 The new countries have thus influenced the weights of
emphasis placed on the 6 variables used to calculate
the score hence the weights attached to the complex
calculation have changed
However it is noticeable that for countries which were sampled
in both time periods the mean scores for the six individual
variables have almost invariably declined and on average more
than half of them have shown a significant level of decline
In particular the question lsquoDo you think you will achieve this
incomersquo has for all countries shown a significant level of
decline We thus hypothesize that the comparative results
show a significant decline
The Young Pragmatic and Penniless Generation | 36
Net
herl
ands
Net
herl
ands
Net
herl
ands
Ger
man
yG
erm
any
Ger
man
yBase 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
Better off 7 4 23 Sw
eden
Swed
en11 5 7 8 3 11 14 50 5
Swed
en
About the same 19 18 27 23 8 19 18 13 29 29 24 21 U
ntie
dU
ntie
dU
nite
d Worse off 66 74 41 58 79 69 71 76 51 47 21 55
Kin
gdom
Kin
gdom
Kin
gdom
Donrsquot know 9 3 9 9 9 4 4 8 9 10 6 19
Fran
ceFr
ance
Fran
ce
Chart 2 Education of 20 ndash 29 year olds by country Q Please choose from the following list the highest level of educational or professional qualification you have
Spai
nSp
ain
Spa
in
Pol
and
Pol
and
Pol
and
Hun
gary
Hun
gary
Hun
gar y
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
dU
nite
d 100 100 100 100 100 100 100 100 100
Stat
es100 100 100
Stat
esSt
ates
Less than high school graduate 2 44 6 14 1 3 2 7 1 3 Ca
nada
Cana
daC
anad
aHigh school graduate 11 33 53 23 22 22 4 41 14 21 1 2
Some college or trade school 46 2 9 9 9 19 37 14 28 20 4 33 Ch
ina
Chin
aC
hina
College degree University degree 31 15 27 30 41 43 21 33 50 46 9 57
Postgraduate degree or 8 3 3 23 25 11 36 1 8 9 80 6 qualification Ja
pan
Japa
n Ja
pan
Other 2 4 1 1 1 2 0 5 0 6 2
None 0 1 1 0 1 0 0
NET Less than undergrad degree 61 82 70 47 34 46 43 66 42 45 11 37
NET Undergrad degree or higher 39 18 30 53 66 54 57 34 58 55 89 63
Chart 3 Aegon Retirement Readiness Index scores for young employees by country
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
NET Low Index (0-5) 80 64 79 81 85 78 81 73 65 61 61 87
NET Medium Index (6-7) 15 30 18 15 14 21 17 23 25 31 31 12
NET High Index (8-10) 4 6 3 3 1 2 2 4 10 8 7 1
Appendix 2 Country comparisons Chart 1 The majority of young employees believe that they will be worse off in retirement compared to their parents Q Do you think that future generations of retirees will be better off or worse off than those currently in retirement
37 | The Young Pragmatic and Penniless Generation
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsI always make sure that 27 34 27 26 17 14 19 22 35 33 32 20 I am saving for retirement
I only save for retirement G
erm
any
Ger
man
y21 27 20 13 17 21 16 6 17 24 20 24 occasionally from time to time
I am not saving for retirement now 6 11 8 11 5 15 9 4 10 8 9 5 although I have in the past Sw
eden
Swed
en
I am not saving for retirement 35 23 34 46 53 40 49 54 36 33 38 46 though I do intend to U
nite
dU
ntie
dK
ingd
omK
ingd
om I have never saved for retirement and 11 6 10 5 8 10 6 13 3 2 1 6 donrsquot intend to
Fran
ceFr
ance
Chart 5 Younger people are more likely not to be using any means of retirement savings Sp
ain
Spai
nQ Which financial means if any are you currently using to prepare for your retirement
Pol
and
Pol
and
only asked in Germany only asked in Spain
Hun
gary
Hun
gary
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
dSt
ates
Stat
es100 100 100 100 100 100 100 100 100 100 100 100
Defined benefit plan 16 10 25 29 15 3 76 11 20 13 5 Ca
nada
Cana
daDefined contribution plan 28 10 17 19 19 14 10 23 40 7 3
Private pension 8 18 14 10 5 9 4 13 12 40 66 4 Ch
ina
Chin
a Government pension social security 12 43 14 21 8 7 4 18 27 33 71 35
Stocks 5 12 14 7 4 17 7 2 13 10 23 9
Bonds 1 8 5 6 2 16 4 2 8 13 14 3 Ja
pan
Japa
n
Mutual funds 2 14 23 4 2 10 3 4 7 16 9 6
Investment insurances (annuities) 2 3 2 3 2 9 4 5 2 4 6 1
Savings accounts 23 37 38 25 23 6 29 15 36 37 65 36
Investment property 2 10 6 7 9 2 5 2 5 11 18 1
Employee stock purchase 1 1 1 4 1 29 0 4 1 7 1
My home 10 5 8 7 7 8 4 6 6 14 30 1
Reverse mortgage 1 4 2 4
My business 2 1 3 2 2 4 1 1 2 4 12 1
Inheritance 3 11 7 11 7 9 9 8 7 9 6 2
Annuities 1 15 2 2 1 4 3 2 1 2 8
Long-term care insurance 2 1 3 2 9 5 1 6 4 7 1
Life insurance 6 11 8 8 14 3 18 15 19 18 36 17
Unterstuumltzungskasse aus 2 Eigenmitteln finanziert
Unterstuumltzungskasse vom 2 Arbeitgeber finanziert
Chart 4 Younger employees are much more likely to aspire to save for retirement Which of the following best explains your approach to saving for retirement This can include money you contribute to any long-term
investment including pensions stocks and shares investment-linked insurances property etc
Q
The Young Pragmatic and Penniless Generation | 38
Plan de empleo mixto 2 (combinacioacuten de las dos anteriores)
Other 1 6 4 0 1 2 2 3 2 2 3 3
None nothing 8 14 12 23 25 31 6 27 21 17 3 24
Donrsquot know 29 6 17 13 19 8 4 9 7 7 0 9
hart 6 The younger generation has more negative associations of retirement Which if any of the following words do you most associate with retirement
Net
herl
ands
Net
herl
ands
Ger
man
yG
erm
any
Swed
enSw
eden
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
d100 100 100 100 100 100 100 100 100 100 100 100
Kin
gdom
Kin
gdom
Freedom 35 32 36 39 19 26 11 20 35 40 37 33
Opportunity 7 27 25 18 4 8 9 10 17 16 9 16 Fr
ance
Fran
ceLeisure 58 48 36 41 23 24 43 32 50 50 55 6
Excitement 2 5 3 8 2 6 1 2 17 17 4 3 Sp
ain
Spai
nPoverty 11 26 23 11 26 14 37 44 7 5 6 20
Insecurity 34 24 18 16 20 18 35 56 10 9 18 44 P
olan
dP
olan
dLoneliness 4 10 17 16 12 7 11 8 5 9 20 12
Ill health 2 19 7 14 15 9 49 23 6 6 29 11 H
unga
ryH
unga
ryDependent on others 11 11 5 18 14 8 18 19 14 6 11 4
Tired 3 4 8 10 14 10 17 6 7 7 13 19 U
nite
dU
nite
dFar away 38 19 25 21 61 32 2 13 33
Stat
es33 14 22
Stat
es
Boredom 14 16 6 12 16 12 15 8 12 12 16 17 Ca
nada
Cana
daEnjoyment 21 16 17 23 14 29 5 3 37 37 35 15
None of the above 0 1 1 2 0 2 1 1 2 2 1 2
Donrsquot know 2 2 3 3 2 2 1 2 0 Ch
ina
6 Ch
ina
hart 7 Many young employees think they are not on course to achieve target retirement income Ja
pan
Japa
n Do you think you will achieve this income [your estimated income needed in retirement]
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
I donrsquot know if I am on course to 56 37 57 59 50 39 49 48 48 41 22 68 achieve my retirement income
No I am on course to achieve around one-quarter (25) of my 10 14 9 13 15 14 14 13 10 10 10 7 retirement income
No I am on course to achieve around 12 20 14 11 19 19 18 15 12 11 23 12 half of my retirement income
No I am on course to achieve around three-quarters (75) of my 8 14 7 4 8 15 9 8 6 11 20 5 retirement income
Yes I am on course to achieve my 15 15 13 14 8 13 11 17 25 27 25 8 retirement income
CQ
CQ
39 | The Young Pragmatic and Penniless Generation
Chart 8 Young people in most countries expect to retire before 65 Q At what age do you expect to retire from all paid employment
Net
herl
ands
Ger
man
y
Swed
en
Uni
ted
Kin
gdom
Fran
ce
Spai
n
Pol
and
Hun
gary
Uni
ted
Stat
es
Cana
da
Chin
a
Japa
n
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
40 or under 0 1 1 0 0 1 3 1 5 12
41-50 1 2 3 5 2 2 6 3 9 4 37 9
51-59 4 4 4 6 2 4 11 5 7 10 30 1
60 5 11 8 12 10 13 19 12 12 16 21 27
61-64 2 11 10 2 20 7 4 13 5 3 1 2
65 17 22 44 31 34 32 16 26 26 32 3 25
66-69 42 32 15 9 12 29 20 13 9 9 0 1
70 19 11 10 18 10 5 10 9 13 12 0 6
71+ 5 5 5 9 4 5 5 3 7 5 1 4
Never 2 1 1 2 2 2 6 4 1 0 0
Donrsquot know 2 3 2 5 3 2 8 9 5 5 1 13
Mean 67 65 65 65 64 65 63 64 63 64 53 59
Median 67 65 65 65 65 65 65 65 65 65 55 60
Chart 9 Younger employees feel they donrsquot have money to invest for retirement Q What is the single biggest obstacle to you saving for retirement right now
Net
herl
ands
Ger
man
y
Swed
en
Uni
ted
Kin
gdom
Fran
ce
Spai
n
Pol
and
Hun
gary
Uni
ted
Stat
es
Cana
da
Chin
a
Japa
n
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
The uncertain economic environment 19 8 13 9 13 19 11 14 12 9 29 27
Lack of money to invest 28 41 33 43 47 34 48 55 47 50 6 19
Fear of poor investment returns over the coming years 2 5 10 7 5 6 8 2 6 8 14 6
Complexity of investment products 4 4 4 3 5 3 5 2 12 5
I donrsquot know how to go about investing for the long-term 2 3 10 8 5 5 3 3 6 8 7 9
The fees charged by financial services companies 2 4 4 2 4 3 4 2 3 5 2 5
I canrsquot afford to take financial advice 3 3 6 8 2 4 3 5 3 2 3 2
I donrsquot trust the financial services industry 12 11 8 6 5 10 6 2 2 3 5 4
I donrsquot see the need to save for the long-term 6 1 2 2 3 3 3 1 2 1 4 3
Concerns about unstable currencies currency fluctuations 2 5 1 3 3 3 4 3 4 5 15 2
Other (PLEASE STATE) 3 3 1 1 3 2 4 6 2 2 1
Donrsquot know 17 12 11 7 8 6 3 6 8 6 3 17
The Young Pragmatic and Penniless Generation | 40
Chart 10 More money would incentivize young employees to save for retirement Q Which if any of the following would encourage you to save for retirement
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsMore generous tax breaks on long-term savings and pensions 20 44 30 32 27 23 42 42 33 43 40 32 products
Ger
man
yG
erm
any
Access to financial education so that I am more aware of what 24 6 14 21 16 22 21 12 23 24 43 25 I need to do for myself
Swed
enSw
eden
Access to professional financial advice so that I have personalized
Uni
ted
20 24 23 23 15 21 25 9 22 23 44 13 U
nite
drecommendations on what steps
Kin
gdom
Kin
gdom
I need to take
Simpler investment products that 12 33 19 28 20 Fr
ance
18 27 16 32 28 36 10 Fr
ance
I can understand with less jargon
Better and more frequent information about my retirement 16 28 20 27 27 23
Spai
n20 18 25 31 45 22
Spai
nsavings
Better legal protection in case I am 12 18 13 18 10 24 18 13 13 19 21 6 P
olan
dP
olan
dsold the wrong product
A pay rise 46 54 44 64 55 50 70 72 67 64 53 37
A better retirement plan pension H
unga
ryH
unga
ry27 32 25 33 29 26 42 35 39 44 33 32 match from my employer
Other 4 2 1 1 2 2 3 3 2 U
nite
d3 0
Uni
ted
Stat
esSt
ates
Donrsquot know 17 9 16 10 10 12 3 8 8 5 3 17
Not applicable - I already have 3 3 4 2 2 1 1 1 2 2 3 sufficient savings Ca
nada
Cana
da
Chin
aCh
ina
Chart 11 A majority of younger employees do not have a written plan for retirement Q Which of the following best describes your retirement planning strategy
Japa
n Ja
pan
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
I have a written plan 7 18 10 9 6 8 6 5 13 10 8 4
I have a plan but it is not written 24 47 37 25 23 31 29 31 37 44 55 24
down
I do not have a plan 61 32 51 61 62 55 62 58 45 42 34 61
Donrsquot know 7 3 3 5 8 6 3 6 4 4 3 12
41 | The Young Pragmatic and Penniless Generation
Chart 12 For young employees friends and family are the leading source of retirement savings information Q And which of these sources (of information) is most important to you
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
Bank adviser 6 11 19 5 25 5 7 4 3 17 10 2 N
ethe
rlan
dsN
ethe
rlan
dsProfessional financial adviser 12 22 10 12 10 19 19 22 21 25 19 10
Insurance agent spokesperson 3 10 2 3 1 3 6 2 3 0 3 2 G
erm
any
Ger
man
yInsurance company website 3 1 3 2 4 4 2 2 1 3 1
Personal finance websites online 8 5 7 8 5 4 10 8 12 6 10 8 retirement planning tools Sw
eden
Swed
enPersonal finance media 2 2 2 2 2 6 3 1 2 1 6 2
Government website 7 1 3 6 U
nite
d5 2 3 3 2 3 7 1
Uni
ted
Kin
gdom
Kin
gdom
Bank website 2 3 3 2 1 0 3 2 1 6 3 3
My employer 12 8 4 9 4 7 5 12 8 5 4 1 Fr
ance
Fran
ceAccountant 2 6 4 4 1 3 1 3 5 5 1 3
Lawyer 2 3 1 2 2 8 4 2 1 2 2 0 Sp
ain
Spai
nFriends and family 21 22 30 28 24 26 18 24 26 20 25 24
None of these P
olan
dP
olan
dNot applicable 21 7 16 18 19 13 17 15 14 9 5 41
Hun
gary
Hun
gary
Chart 13 Most young workers feel their employer should provide some kind of pension Q In the future what if anything should employers do to help people plan for retirement
Uni
ted
Uni
ted
Stat
esSt
ates
Cana
daCa
nada
Chin
aCh
ina
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 Ja
pan
Japa
n Employers should be required to 24 43 20 40 21 26 20 28 37 34 20 30 contribute to workersrsquo pensions
Employers should be required to make a pension available but not to 12 13 7 17 20 15 15 4 11 14 22 5 contribute into it
Employers should not be required to provide pensions but should 15 9 12 8 9 8 11 6 11 9 9 11 provide information on how to plan for retirement
Employers should provide a range of flexible benefits and 13 18 18 16 15 27 25 28 21 22 45 12 allow individuals to choose which benefits they actually want
Nothing ndash it should be left to individual employees to take care 2 2 5 1 4 3 3 5 6 5 1 9 of themselves
Nothing ndash it should be left to the government to take care of its 2 5 5 2 5 8 15 14 1 4 0 4 citizens
Donrsquot know 30 10 32 17 27 12 12 15 13 13 3 29
The Young Pragmatic and Penniless Generation | 42
Chart 14 Workplace pensions are relatively low down in young workersrsquo priorities when choosing a job Q How important to you would the following workplace benefits be if you were choosing your next job
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsBasic salary 86 93 88 91 88 92 90 94 90 93 96 94
Holiday entitlement 87 94 89 91 92 94 91 94 93 94 96 91 G
erm
any
Ger
man
yOvertime and bonus pay 86 93 87 88 89 90 89 94 90 91 97 90
Location of workplace 88 91 86 92 89 90 89 92 93 93 92 86 Sw
eden
Swed
enMedical health insurance 73 92 84 65 86 87 88 87 93 94 98 83
Opportunities for career progression 86 91 81 90 90 94 91 94 92 91 96 81 U
nite
dU
nite
dAccess to a workplace retirement 85 85 81 82
Kin
gdom
78 84 80 78 84 86 93 74 K
ingd
omplan with employer contributions
Access to good training provision 85 87 85 88 86 91 85 93 86 90 95 74 Fr
ance
Fran
ceFlexible working hours 79 87 58 86 81 89 81 87 91 91 92 57
Life insurance 72 75 79 69 80 82 Sp
ain
84 80 81 88 93 74 Sp
ain
(death in service benefits)
Phased retirement or other employer programs providing for 74 54 75 71 72 81 76 74 76 81 91 65
Pol
and
Pol
and
a transition into retirement
Ability to work past the normal 68 57 64 65 64 74 72 65 74 76 80 70 retirement age H
unga
ryH
unga
ry
Access to a workplace retirement 62 74 61 68 59 77 61 47 68 74 89 65 plan without employer contributions U
nite
dU
nite
dSt
ates
Stat
esEmployee share plans 50 72 54 65 59 73 61 51 64 73 91 55
Access to creche help with the 67 75 64 56 69 79 75 83 58 69 89 68 cost of childcare Ca
nada
Cana
da
Opportunities for foreign travel 53 54 60 55 50 71 58 66 57 61 79 37
Company car 51 46 45 47 49 63 51 49 36 49 69 Ch
ina
39 Ch
ina
Japa
n Ja
pan
Chart 15 Young workers think the state pension will need to be reformed Q With the cost of government pensions becoming a greater concern as people live longer which if any of the following do you think
the government should undertake
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
The government should reduce the overall cost of state pension 15 33 16 15 16 20 28 22 21 26 30 16 provision by reducing the value of individual pension plans
The government should increase overall funding available for the 12 21 30 22 14 34 19 26 21 18 29 10 state pension through raising taxes
43 | The Young Pragmatic and Penniless Generation
he government should take a alanced approach with some 27 26 12 30 28 23 24 16 34 31 38 41 eductions in individual payments nd some increases in tax
he government should not do nything State pension provision 7 2 12 5 3 4 3 3 5 4 0 5 ill remain perfectly affordable in he future
onrsquot know 38 19 29 29 39 20 26 34 19 21 4 28
Net
herl
ands
art 16 Products which protect against investment risk are the most important to young workers ( interested) Thinking about the types of financial products you could purchase to help provide you with security in retirement on a scale of 1 to 5
how interested are you in the following options G
erm
any
Swed
en
Uni
ted
Kin
gdom
ase 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 Fr
ance
100 100 100 100 100 100 100 100 100 100 100 100
product providing a guaranteed etirement income stream or 75 81 73 76 74 83 78 76 87 85 94 69
Spai
nifetime income in retirement
product which protects my 74 79 73 76 72 82 77 74 84 86 94 65 etirement income against inflation P
olan
d
product which guarantees that I 72 82 73 78 75 81 76 73 86 86 90 67 onrsquot lose my initial investment H
unga
ry product which helps meet the ost of long-term care if I become 74 79 74 77 70 79 76 71 86 85 84 66
Uni
ted
nable to look after myself St
ates
product which protects my capital 71 81 71 76 68 76 77 73 84 83 93 65 rom poor investment returns Ca
nada
product which generates a etirement income and allows 69 78 71 75 68 81 77 72 84 86 94 70 e to take a lump sum from the
Chin
anvestment should I need to
product where the annual 66 78 68 75 72 79 77 70 85 86 87 64 anagement charges are kept low Ja
pan
product which enables me to eep some control over how my 71 73 70 75 72 80 75 69 88 85 91 63 avings are invested during my etirement
product which manages the sset allocation so that I am never 68 70 67 73 66 76 71 67 80 83 95 60 xposed to a level of risk Irsquom not omfortable with
product which continues to rovide a retirement income to my 74 78 71 75 73 81 79 73 86 82 94 60 pouse in the event that I die first
product which protects my family gainst having to pay estate taxes 73 76 71 74 75 81 75 69 82 82 89 56 hen I die
product which locks in investment 72 71 63 73 64 71 59 56 81 84 89 61 eturns during the good years
Tbra
Tawt
D
ChQ
B
Arl
Ar
Ad
Acu
Af
Armi
Am
Aksr
Aaec
Aps
Aaw
Ar
The Young Pragmatic and Penniless Generation | 44
75
21
4
69
27
4
64
31
4 5
7
36
7
20-29
30-39
40-49
50-59
44
40
16
NET Low Index (0-5)
NET Medium Index (6-7)
NET High Index (8-10)
60-69
Retirement readiness and young employees However many young employees have concerns about achieving
Retirement is seen as a major life stage by young employees this Over a third (38) are pessimistic that they will not have
They typically expect to spend an average 20 years of their lives enough to live on in retirement and 44 are pessimistic about
in retirement a definition of retirement that is consistent across being able to choose when they retire Furthermore 28 have
all working age groups Retirement conjures broadly positive made no plans at all for their retirement which may help explain
associations Fully 63 of employees in their twenties aspire some of these concerns Health worries are less of an issue with
to travel during retirement 39 see it as a period of leisure 52 being optimistic that they will enjoy good health in old age
and 30 associate it with freedom The need to plan and save although 20 believe that they will not which is perhaps related
for this phase of life is also widely accepted Half (50) of to the 17 who associate retirement with ill health in general
employees in their twenties are aware of the need to save and
64 feel a high or very high degree of personal responsibility Overall 75 of employees in their twenties achieved a low
to ensure sufficient income for retirement retirement readiness score of 0-5 on the Aegon Retirement
Readiness Index (please refer to the glossary and Appendix 1 for
an explanation of the Index) The percentage of employees with a
low score of 0-5 drops with each increase in age group and is 44
among those in the lsquoat retirementrsquo group of 60 to 69 year olds
Chart 6 Aegon Retirement Readiness Index scores for employees across age groups For more information on the ARRI see page 36
Base All aged 20 - 69
Life stage and savings attitudes Getting married and starting a family are two such events
he Retirement Readiness Index reveals that retirement Of employees in their twenties 25 are married and
reparedness is to some extent age- and life stage-related 25 have children whereas for those in their 30s 54 are
hart 6) For younger employees the idea that retirement is married and 56 have children representing a major shift
r awayrsquo combined with lower earnings and other spending toward parenthood
riorities (such as higher education or purchasing a house)
an be powerful obstacles to saving for retirement Thus while Encouragingly while young employees are less likely to
5 of all employees say that they lsquoalways make surersquo that they have started saving for retirement many see themselves as
re saving for retirement just 25 of 20-29 year olds do so future lsquoaspiringrsquo savers Fully 41 intend to save in the future
t present over half (57) of 20-29 year olds are not saving compared to 27 of all employees and only 7 do not intend
r retirement compared to 46 of all employed adults to save for retirement This large group of aspiring savers
ven in China where 44 are always saving for retirement who are committed to the idea of putting money aside for
st 32 of 20-29 year olds do so retirement challenges the view that young people are unwilling
to save Furthermore since converting these young employees
his life cycle effect can be seen in numerous ways At the from aspiring savers to regular savers may depend on the
utset of adult life employees experience lower income and right economic conditions and appropriate financial incentives
igher spending as they prioritize and fund life events with a helping them is a major opportunity for governments and
ignificant impact on their ability or desire to save for retirement employers
T
p
(C
lsquofa
p
c
3
a
A
fo
E
ju
T
o
h
s
13 | The Young Pragmatic and Penniless Generation
35 25 20 19 12 9 27 41 7 7
I always make sure I only save for I am not saving for I am not saving for I have never saved that I am saving retirement occasionally retirement now although retirement though for retirement and for retirement from time to time I have in the past I do intend to donrsquot intend to
All 20 to 29 year olds
NET Low Index (0-5)
NET Medium Index (6-7)
NET High Index (8-10)
Chart 7 Younger employees are much more likely to aspire to save for retirement but the majority are not saving Q Which of the following best explains your approach to saving for retirement This can include money you contribute to any
long-term investment including pensions stocks and shares investment-linked insurances property etc
Other findings support the assertion that younger savers This can be seen in Chart 8 More 20-29 year olds claim that
are open to increasing their retirement savings Over a third they are not likely to be saving for retirement by any means
(37) of 20-29 year olds feel lsquovery responsiblersquo for ensuring (17 against 12 for all adults) and are generally less likely
a sufficient retirement income Note however that this does to use any of the savings products mentioned Revealingly
not translate into better developed financial plans and savings 20-29 year olds are far less likely to name lsquogovernment benefits
strategies Only 7 in this age group feel they have lsquowell in retirementrsquo as a source of retirement income although almost
developedrsquo personal retirement plans and 33 say they are all respondents have some such entitlement This may be due
lsquohardly saving anythingrsquo for retirement Clearly awareness of the to unawareness of government benefits and or greater
retirement situation does not translate into actual retirement scepticism about governmentsrsquo ability or willingness to
planning activity provide for them in old age
The Young Pragmatic and Penniless Generation | 14
Chart 8 Younger people are more likely not to be using any means of retirement savings Q Which financial means if any are you currently using to prepare for your retirement
33 Savings accounts 31
36 Government pension social security 24
25 Defined benefit plan 21
22 Private pension 17
23 Defined contribution plan 15
20 Life insurance 15
14 Stocks 10
14 My home 9
12 Mutual funds 8
9 Inheritance 7
9 Bonds 7
8 Investment property 7
5 Employee stock purchase 5
5 Investment insurances (annuities) 4
4 Long-term care insurance 4
6 Annuities 3
My business 2 3
Reverse mortgage 1 1
Other 3 2
12 None nothing 17
6 Donrsquot know 10
All 20 to 29 year olds
Leisure
Freedom
Far away
Insecurity
Enjoyment
Poverty
Ill health
Boredom
Opportunity
Dependent on others
Loneliness
Tired
Excitement
None of the above
Donrsquot know
Retirement associations What does the younger generation feel about retirement and want to get out of it Perhaps unsurprisingly 20-29 year olds are more
likely to be negative than older respondents associating retirement with boredom loneliness and ill health They are also far more
likely to believe retirement is lsquofar awayrsquo which is likely to be a barrier to retirement saving
15 | The Young Pragmatic and Penniless Generation
Chart 9 The younger generation has more negative associations with retirement Q Which if any of the following words do you most associate with retirement
44 Leisure 39
36 Freedom 30
17 Far away 26
25 Insecurity 25
25 Enjoyment 21
19 Poverty 19
15 Ill health 17
9 Boredom
13
16 Opportunity
13
10 Dependent on others
12
9 Loneliness
11
0
r olds
7Tired
1
6Excitement
6
2None of the above
1
2Donrsquot know 2
All 20 to 29 yea
Aspirations and responsibilities for retirement Income levels in retirement ung people have similar retirement aspirations to the general A high proportion (47) do not know if they are on course
pulation for example travel (63) spending time with to achieve their retirement income goal Combined with the
iends and family (61) and pursuing new hobbies (52) high level of financial responsibility young employees expect
r them however retirement also includes the responsibility of to assume in retirement it is clear that people not only need
ring for others Two-fifths (40) believe that lsquoadult children to build much greater awareness of what kind of financial
retirees should help through providing financial support to pressures they are likely to face in retirement but also require
eir parents if neededrsquo and 28 believe that this will affect greater support in establishing realistic retirement income
em directly in retirement through providing financial support targets which are capable of meeting their needs
their parents A fifth (21) also expect to spend some of
eir retirement caring for other family members while just
donrsquot expect to provide for anyone compared to 40 of all
ployees Clearly todayrsquos young employees anticipate serious
ancial responsibilities in their retirement
Yo
po
fr
Fo
ca
of
th
th
to
th
30
em
fin
The Young Pragmatic and Penniless Generation | 16
Chart 10 Many young employees do not think that they are on course to achieve target retirement income Q Do you think you will achieve this income [your estimated income needed in retirement]
Base 20-29 year olds
Yes I am on course to achieve my retirement
income
16
47
12
16
10
I donrsquot know if I am on course to achieve my
retirement income
No I am on course to achieve around
one-quarter (25) of
No I am on course to achieve around half of my
retirement income
No I am on course to achieve around
three-quarters (75) of my retirement income
532
China
586
Japan
United S
tate
s
628
Poland
635
Canad
a
636
Hunga
r
638
y
Fran
ce
645 647
Spain
Sweden
649
United K
ingdom
651
Germ
any
653
Nether
lands
666
my retirement income
When will young people retire Media reports about the need to raise the age of retirement appear to have influenced younger employees Fully 44 of 20-29 year
olds do not expect to be able to choose their retirement date although the younger generation do expect to retire at a similar age
to older employees 63 This varies considerable by country In the Netherlands young employees expect to retire eight years later
than those in Japan Some countries such as China and Japan have surprisingly low expected retirement ages suggesting that young
employees may benefit from having a better understanding of when government or workplace retirement benefits kick in
Chart 11 Young people in most countries expect to retire before 65 Q At what age do you expect to retire from all paid employment
Base 20-29 year olds
Despite expecting to retire at the same age as their parents younger employees are more open to a transition into retirement
reflecting their more flexible outlook toward work Around half (51) are happy to change the way they work in some way as they move
into retirement Just 8 expect to keep working as they do currently
17 | The Young Pragmatic and Penniless Generation
Part 3 What is holding young employees back Insights into what young employees feel is holding them back from saving or saving more can be used to encourage younger people to adopt more positive savings behaviors This chapter explores the attitudes of young employees toward the financial obstacles they face and asks what actions they have taken in preparation for retirement The findings reveal that while the majority lacks adequate planning for their retirement needs financial shortcomings are only part of the stor y Spending preferences play a key role in the savings gap of advanced economies
The Young Pragmatic and Penniless Generation | 18
Lack of money to invest 37
16 The uncertain economic environment
7 Fear of poor investment returns over the coming years
6 I donrsquot trust the financial services industry
6 I donrsquot know how to go about investing for the long-term
4 oncerns about unstable currencies currency fluctuations
4 Complexity of investment products
4 I canrsquot afford to take financial advice
3 The fees charged by financial services companies
3 I donrsquot see the need to save for the long-term
Other 2
Donrsquot know 8
A pay rise
More generous tax breaks on long-term savings and pensions products
A better retirement plan pension match from my employer
Better and more frequent information about my retirement savings
Simpler investment products that I can understand with less jargon
Access to professional financial advice so that I have personalized recommendations on what steps I need to take
Access to financial education so that I am more aware of what I need to do for myself
Better legal protection in case I am sold the wrong product
Other
Not applicable - I already have sufficient savings
Donrsquot know
Obstacles and incentives to saving
Chart 12 Younger employees feel they donrsquot have money to invest for retirement Q What is the single biggest obstacle to you saving for retirement right now
Base 20-29 year olds
C
What is the single biggest obstacle preventing twentysomethings that they rank pressing and desirable life goals such as marriage
m saving for retirement Not having enough money to invest starting a family vacations and other leisure activities above the
top of the list cited by over a third (37) although this figure need to plan for retirement This suggests the savings gap is
ops to just 6 in the emerging market of China where mean preference-driven
omes are the lowest by far ($18000) suggesting that lack of
sh may be partly a state of mind Young employees in China The biggest obstacle to retirement savings cited by one-eighth
actually more worried about local concerns such as economic (13) of respondents is either not knowing how to invest for the
certainty (29) and currency instability (15) Behavioral long-term or the complexity of investment products charges and
ance has an impact too with the way young employees frame fees Ready solutions to this include improving young employeesrsquo
eir financial priorities creating its own obstacles to saving financial literacy about retirement planning and creating easier
many as 57 of 20-29 year olds believe that saving for access to professional financial advice
tirement is important but not a current priority suggesting
fro
is
dr
inc
ca
are
un
fin
th
As
re
19 | The Young Pragmatic and Penniless Generation
Chart 13 More money would incentivize young employees to save for retirement Q Which if any of the following would encourage you to save for retirement
Base 20-29 year olds
57 A pay rise
More generous tax breaks on long-term savings and pensions products
34
A better retirement plan pension match from my employer
33
Better and more frequent information about my retirement savings 26
Simpler investment products that I can understand with less jargon 24
Access to professional financial advice so that I have personalized recommendations on what steps I need to take 23
Access to financial education so that I am more aware of what I need to do for myself 22
Better legal protection in case I am sold the wrong product 16
Other 2
Not applicable - I already have sufficient savings 2
Donrsquot know 10
Chart 14 Very few younger employees have a written plan for retirement Q Which of the following best describes your retirement planning strategy
Base 20-29 year olds
5 Donrsquot know I have a
written plan
8
34 I have a plan but it is not
52 written down
I do not have a plan
Turning to incentives greater remuneration predictably tops a list Retirement planning of what would encourage 20-29 year olds to save for retirement Retirement planning is essential to adequate retirement saving
More tellingly a third (33) would like their employer to provide although it is somewhat lacking in todayrsquos younger employees
a better retirement plan into which both parties contribute Over half (52) have no retirement planning strategy at all
Better information and simple products would also help more and only 8 have noted down their retirement strategy
people to save A quarter (26) would be encouraged to save by
better and more frequent information about retirement savings Nevertheless the respondents polled believe that the current
while a similar number (24) want simple investment products global economy makes retirement planning increasingly
that are easy to understand As with the previous question a important ndash 71 agreed with this statement It is clear from this
lack of investment knowledge and the complexity of investment that young people between the ages of 20 and 29 do not lack
products are revealed as obstacles to savings the will to save they lack the opportunity
The Young Pragmatic and Penniless Generation | 20
Part 4 Creating the right conditions for young employees to save How may young employeesrsquo obstacles to saving be overcome For retirement readiness this will be a defining question of the early twenty-first centur y ndash and an extremely challenging one given the number of serious issues affecting younger employeesrsquo finances What was learned in the previous chapter about encouraging young employees to save is a start This chapter examines which areas and triggers to saving can be unlocked and whether government employer or individual should take most responsibility
21 | The Young Pragmatic and Penniless Generation
Friends and family
Professional financial adviser
17
24
Bank adviser 9
Personal finance websites online retirement planning tools
My employer
Government website
4
8
7
Insurance agent spokesperson
Accountant
3
3
Personal finance media 3
Lawyer
Bank website
3
2
Insurance company website
Donrsquot know
2
15
Information and advice on retirement saving strong theme revealed by our findings is that younger This finding is remarkably consistent across the countries
mployees want more information on savings products and sur veyed despite significant differences in market makeup
etter access to advice The largest share 24 (compared although some differences exist For instance a quar ter
o 17 for all employees) finds friends and family to be the (25) of young employees in France turn to bank advisers
ost important source of advice followed by professional for financial information nearly triple the number among all
dvisers (17) and bank advisers (9) That young employees young people (9)
urn to friends and family first suggests an unmet need for
rofessional financial advice This is both a challenge and an
pportunity for the financial ser vices sector
hart 15 For young employees friends and family are the leading source of retirement savings information Which of these sources (of information) is most important to you
ase 20-29 year olds
A
e
b
t
m
a
t
p
o
CQ
B
What is the role of the workplace in retirement planning Does this influence what retirement benefits younger
In response to shifting employment patterns todayrsquos younger employees expect from their workplace Certainly a majority
employees are less loyal to their employers than older workers favor workplace retirement plans with 61 believing that these
Fully 39 of 20-29 year olds are planning to look for a new job should be a fundamental part of pay (although this is lower
in the next 12 months compared to 29 of all workers and than for employees overall) and just 4 feel that retirement
31 frequently think about quitting their jobs Strikingly while planning should be left entirely to individuals
53 of all workers plan to stay with their current employer
until retirement just 37 of 20-29 year olds say this However there is evidence of a slight shift in perceptions
Younger workers are less likely to want workplace retirement
Doubtless much of this is because younger workers are more plans over other factors Of those who want employer
mobile and have more opportunities Another trigger to lower retirement plan contributions only 46 wanted this even if
employer loyalty may be the expectation of holding more jobs it reduced benefits and 35 (compared to 43 of all workers)
and even pursuing multiple careers over a working lifetime if it cut jobs
The Young Pragmatic and Penniless Generation | 22
Donrsquot know Employers should be
required to contribute to workersrsquo pensions
5 Nothing ndash it should be left to the government to take 18
care of its citizens 28
4 Nothing ndash it should be left to individual employees to
take care of themselves
13
22
Employers should provide a range of flexible benefits
and allow individuals to choose which benefits they
actually want
10 Employers should
be required to make a pension available but not
to contribute into it
Employers should not be required to provide pensions but should
provide information on how to plan for retirement
Chart 16 Most young workers feel that their employer should provide some kind of pension Q In the future what if anything should employers do to help people plan for retirement
Base 20-29 year olds
Are other workplace benefits more important Younger workers were asked to rate the importance of various workplace benefits The results reveal how highly they value the
elements of their compensation package Chart 17 shows that 87 of young employees believe a workplace retirement plan with
employer contributions would be an important factor when choosing their next job While retirement may be decades away for
twentysomethings 80 believe programs provide for a phased retirement are important
23 | The Young Pragmatic and Penniless Generation
Basic salary 94
93 Holiday entitlement
91 Overtime and bonus pay
91 Location of workplace
88 Medical health insurance
87 Opportunities for career progression
Access to a workplace retirement plan with employer contributions 87
Access to good training provision 86
Flexible working hours 85
Life insurance (death in service benefits) 81
Phased retirement or other employer programs providing for a transition into retirement 80
Ability to work past the normal retirement age 70
Access to a workplace retirement plan without employer contributions
67
Employee stock plans 65
Access to creche help with the cost of childcare 59
Opportunities for foreign travel 50
Company car 43
Chart 17 Workplace retirement plans are a relatively low priority for younger workers when choosing a job How important to you would the following workplace benefits be if you were choosing your next job
ase 20-29 year olds
Q
B
Regarding workplace benefits provided by employers today considered just enough to fulfill basic needs and in China a
young employees are about as likely as all workers to be offered fully formed nationwide retirement system is still some way off
retirement tools such as annual plan statements and online The future shape and affordability of these plans is debated in
tools from their employer though it is concerning that 24 do all of the sur vey countries to var ying degrees
not know if such tools are available or not Those provided are
considered helpful Younger workersrsquo views on reform are important because
changes to government retirement benefits are more likely
The role of government to affect them than any other part of the working population
The generosity of government retirement benefits varies The main concern cited by 57 is of facing less generous
considerably in the countries sur veyed In some countries such government retirement benefits than those enjoyed by their
as France government benefits are the primar y mechanism parentsrsquo generation
for funding retirement while in the United Kingdom they are
The Young Pragmatic and Penniless Generation | 24
The government should reduce the overall cost of state pension provision by
reducing the value of Donrsquot know individual pension plans
25 22
4 The government should not do anything State pension provision will
remain perfectly affordable in the future
28
21 The government should increase overall funding
available for the state pension through
raising taxes
The government should take a balanced approach with some reductions in individual payments and
some increases in tax
Chart 18 Young workers think that the government retirement system will need to be reformed Q With the cost of government retirement benefits becoming a greater concern as people live longer which
if any of the following do you think the government should undertake
Base 20-29 year olds
The younger generation believes that the government cannot What do young employees look for in a retirement product continue to provide as it does now ndash just 4 think government The sur vey findings show that young employees have
benefits will remain affordable to society However there is no reser vations about employer and government retirement
consensus on what governments should do to reform retirement benefits So what then do they want from a private savings
plan systems Over a fifth (22) think retirement entitlements product The savings product feature most valued by younger
should be cut just over a fifth (21) think governments should workers is protection against investment risk (Char t 19)
raise taxes and more than a quarter (28) think a mixture of This may be in the form of no loss of initial investment a
the two is the best solution Another quarter admits that they guaranteed income stream or protection against inflation
donrsquot know what should be done This is reasonable ndash the initial investment of those farthest
from retirement is most at risk However less consideration
is given to savings grow th through investment returns This
suggests that there is an oppor tunity to educate young
workers about the trade-off between returns and risk
management and what they stand to gain
25 | The Young Pragmatic and Penniless Generation
Chart 19 Products which protect against investment risk are the most important to young workers ( interested) Q Thinking about the types of financial products you could purchase to help provide you with security in retirement on a scale of 1 to 5
how interested are you in the following options
Base 20-29 year olds
A product providing a guaranteed retirement income stream or lifetime income in retirement 82
A product which protects my retirement income against inflation 81
A product which guarantees that I donrsquot lose my initial investment 81
A product which helps meet the cost of long-term care if I become unable to look after myself 80
A product which protects my capital from poor investment returns 79
A product which generates a retirement income and allows me to take a lump sum from the investment should I need to 79
A product where the annual management charges are kept low 78
A product which enables me to keep some control over how my savings are invested during my retirement 77
A product which manages the asset allocation so that I am never exposed to a level of risk Irsquom not comfortable with 76
A product which continues to provide a retirement income to my spouse in the event that I die first 75
A product which protects my family against having to pay estate taxes when I die 72
A product which locks in investment returns during the good years 70
The lsquodefined ambitionrsquo retirement system in This removes some of the disadvantages of leaving
the Netherlands a sustainable retirement solution retirement liabilities exclusively up to employers
for young workers (defined benefit) or employees (defined contribution)
In the Netherlands as elsewhere young workers are faced In the Netherlands this is likely to involve legislation which
with an increasing retirement age decreasing government lets retirement funds automatically adjust pay-outs and
suppor t for retirement and declining traditional defined retirement age as life expectancy changes xii
benefit employer retirement plans Reforms proposed
by the Dutch may show a way for ward for all mature and This model has garnered interest elsewhere In the
aging economies United Kingdom Pensions Minister Steve Webb expressed
interest on a more limited scale with a government
rsquoDefined ambitionrsquo proposes that risks are not taken on fully guarantee for a minimum rate of return for defined
by either employer or employee but are shared contribution retirement plans
The Young Pragmatic and Penniless Generation | 26
Recommendations Enabling young workers to save The studyrsquos findings reveal that the majority of young workers (66) are either saving consistently or aspire to start saving but face challenges including debt low pay and funding for significant life events and generational changes to the economic landscape and government and employer support If young people are to achieve a prosperous retirement their willingness to save should be met with better opportunities to save Here is what can be done by employers governments and young people themselves to address retirement planning concerns for younger adults
27 | The Young Pragmatic and Penniless Generation
Individuals Employers and governments
Determine how much income you need in retirement Auto-enroll employees into a workplace retirement plan Young people accept the need to save for retirement but donrsquot If an auto-enrollment workplace retirement plan is feasible
know how to act on that need They can become more retirement this can play a major role in getting young workers saving early
savvy simply by talking to friends and family (as do 24 of and regularly Combined with auto-escalation (the automatic
our respondents already) or employers going online to use annual increase in retirement plan contributions) and matching
retirement calculators or reading the personal finance media contributions it can lead to greater retirement readiness
Seek out a financial advisor Provide more flexible savings products through the workplace Young people are faced with life events that make it easy to Not all savings journeys start with a retirement plan particularly
feel overwhelmed by financial priorities in addition to retirement for young people who may think of retirement as lsquotoo far awayrsquo
planning Soliciting advice from a finance professional early in Employers can kick-start the savings habit in younger workers
life (17 of young employees have done so already) helps with by providing flexible easy to access and easy to understand
planning and priorities and making sense of long-term finances savings plans as a more attractive starter option
Start saving now and save consistently Make company retirement plans more portable As with all employees young people will strengthen their Young people move jobs much more often than previous
retirement readiness simply by saving regularly Today only 25 generations of employees so savings like DC retirement plans
of young people always save yet even small regular amounts need to follow employees when they change jobs
will improve retirement readiness over time
Make tax incentives more effective Ask your employer about workplace retirement savings plans All countries encourage long-term savings through tax relief but
and other retirement benefits young people often arenrsquot aware of this or donrsquot understand it
While one third (33) of young people believe that a workplace A more targeted system of tax relief could help provide clearer
retirement savings plan provides a major opportunity to start and simpler signals to younger people about the financial
saving employers often experience difficulties in engaging benefits of long-term saving
younger employees in discussions about retirement planning
The workplace is an important channel for achieving retirement Make better financial education central to the workplace readiness so be sure to max out on any employer contributions retirement offer
Young people who aspire to save may be prevented from
doing so by setting the wrong financial priorities Workplace
retirement education ndash alongside professional advice ndash can help
guide young people toward the right long-term priorities at an
earlier age in life
The Young Pragmatic and Penniless Generation | 28
29 | The Young Pragmatic and Penniless Generation
Glossary
Aegon Retirement Readiness Index (ARRI) c areer average retirement plan The ARRI assesses the relative levels of retirement A type of defined benefit plan that is based on an
preparedness of employees across different countries on a employeersquos average retirement earnings over the duration
scale from 1 to 10 The Index is based on three questions of plan membership Same as average salary plan
covering attitudes and three questions covering behaviors
defined ambition (DA) plan average salary plan A type of retirement plan in which retirement plan risks
A type of defined benefit plan that is based on an are shared between the employer and the employee
employeersquos average retirement earnings over the duration It offers greater certainty to savers around the final value
of plan membership Same as career average plan of their retirement assets than in DC plans and less
cost volatility for employers than with DB plans In the
a nnuity Netherlands Defined Ambition (DA) retirement plans are
A form of contract sold by life insurance companies that being introduced in order to help relieve the pressure on
guarantees a fixed or variable payment to the annuitant employers while still trying to provide employees with a
at some future time usually retirement All capital in the more secure retirement plan The United Kingdom too is
annuity grows tax-deferred looking at DA retirement plans as a solution
auto enrollment defined benefit (DB) plan An employer-sponsored retirement plan in which the An employer-sponsored retirement plan where the amount
employer is able to enroll an employee without that of future benefits an employee will receive from the plan is
employeersquos express authorization The employer determines defined typically by a formula based on salary history and
what percentage of the employeersquos salary or wages is years of service The amount of contributions the employer
contributed to the plan The employee is able to change is required to make will depend on the investment returns
this percentage and can opt out of enrollment in the plan experienced by the plan and the benefits promised
Contrast defined contribution plan
a uto-escalation A feature of a plan which automatically increases the defined contribution (DC) plan percentage of (retirement) funds saved from salary An employer-sponsored retirement plan such as a 401(k)
This feature generally uses a default or standard plan or a 403(b) plan in the United States in which
contribution escalation rate contributions are made to individual participant accounts
Depending on the type of DC plan contributions may be
B aby Boomers made by the employee the employer or both
A term used to refer to people generally born between
the end of World War II in 1945 and the mid 1960s The employeersquos benefits at retirement or termination of
Other generations Silent Generation - the generation born employment are based on the employee and employer
between 1925 and 1945 Generation X - the generation contributions and earnings and losses on those
born between 1965 and 1979 Millennials or Generation contributions See also 401(k) and 403(b) plan
Y - the generation born between 1980 and 2000 and often Contrast defined benefit plan
classified as the children of Baby Boomers
The Young Pragmatic and Penniless Generation | 30
401(k) plan An employer sponsored retirement plan that enables
employees to make tax-deferred contributions from their
salaries to the plan
403(b) plan An employer-sponsored defined contribution plan that
enables employees of universities public schools and
non-profit organizations to make tax-deferred contributions
from their salaries to the plan
final salary plan A type of defined benefit plan in which retirement
benefits are based on final retirement salary in the years
immediately before retirement benefits are received
Millennials A term used to refer to the people born from about 1980
to 2000 brought up using digital technology They are
often classified as the children of Baby Boomers
r etirement (or pension) plan Provides replacement for salary when a person is no
longer working due to retirement In the case of a defined
benefit retirement plan the employer or union contributes
to the plan which pays a predetermined benefit for the
rest of the employeersquos life based on length of service and
salary Payments may be made either directly or through
an annuity Retirement plan payments are taxable income
to recipients in the year received The employer or union
has fiduciary responsibility to invest the retirement plan
funds in stocks bonds real estate and other assets earn
a satisfactory rate of return and make payments to retired
workers Retirement plan funds holding trillions of dollars
are one of the largest investment forces in the stock
bond and real estate markets If the employer defaults in
the United States retirement plan payments are usually
guaranteed by the Pension Benefit Guaranty Corporation
(PBGC)
variable annuities (VA) An insurance contract in which the insurance company
guarantees a minimum payment at the end of the
accumulation period The payments may vary depending
on the financial performance of the managed portfolio
31 | The Young Pragmatic and Penniless Generation
About Aegon Transamerica Center for Retirement Studiesreg and Cicero Consulting
Aegon Transamerica Center Aegon is an international life insurance pensions and asset reg management company with businesses in over 20 markets for Retirement Studies in the Americas Europe and Asia Aegon companies employ The Transamerica Center for Retirement Studiesreg (TCRS) is
around 24000 people and serve millions of customers a division of the Transamerica Institute a nonprofit private
worldwide foundation TCRS is dedicated to educating the public on
wwwaegoncom emerging trends surrounding retirement security in the
United States TCRSrsquo research emphasizes employer-sponsored
In 2010 Aegon became a founding member of the Global retirement plans issues faced by small to mid-sized companies
Coalition on Aging which seeks to raise awareness of aging and their employees and the implications of legislative and
issues among policymakers and the general public A major aim regulatory changes Transamerica Institute is funded by
of the coalition is to transform the way we think and speak contributions from Transamerica Life Insurance Company and
about aging replacing the familiar rhetoric of lsquoproblemsrsquo with its affiliates and may receive funds from unaffiliated third-
a more positive discussion of lsquopossibilitiesrsquo and lsquoopportunitiesrsquo parties For more information about TCRS please refer to
wwwglobalcoalitiononagingcom wwwtransamericacenterorg
Cicero Consulting A leading consultancy firm serving the banking insurance and
asset management sector Cicero specializes in public policy
and communications consulting as well as global thought
leadership and independent market research Cicero was
established in 2001 and now operates from offices in London
Brussels Washington and Singapore As a market leader in
pensions and retirement research Cicero designed
and analyzed the research and contributed to the report
wwwcicero-groupcom
The Young Pragmatic and Penniless Generation | 32
Marta acebo Mark Green Patricia Plas
Paula alvarez douGlas henck scott roane
Frits bart wendel hoFMan thurstan robinson
Grace basile
lynette belFry
andrew berwick
Frans van der horst
tatsuo kai
herMan kaPPelle
Patti rowey
sarah russell
Joost van schaGen
robin boon Gaacutebor kePecs dick schiethart
bert-JaaP brons Marco keiM erik schouten
douG brooks
libby buet
kent callahan
JaiMe kirkPatrick
bas knol
roGer koch
anGela seyMour Jackson
kate sMith
renske stoker
Jeanne de cervens
dana chen
Peter kunkel
alexander kuiPers
eyleen sun
MartiJn tans
arkadiusz chMurzynski
heidi cho
brian lewis
Mike linder
GreG tucker
Mark twiGG
siMon clow siMon luke catherine wanG
robert colliGnon Jason Ma Marc van weede
catherine collinson GrzeGorz Mathea tiM willaert
wendy daniels
Michel denizot
edit drevenka
Paul Middleton
takaoh MiyaGawa
david Moulton
daniel wriGht
alex wynaendts
MacieJ zaPala
Jan driessen
kelly Fu
adrian Grace
Mark Mullin
Marcelle noltenius
stiG nybo
Peacuteter zatykoacute
vicky zeldin
Disclaimer This repor t contains general information only and does
not constitute a solicitation or offer No rights can be
derived from this repor t Aegon its par tners and any of
their affiliates or employees do not guarantee warrant
or represent the accuracy or completeness of the
information contained in the repor t
Acknowledgements
33 | The Young Pragmatic and Penniless Generation
References and notes i For a comparison of different retirement systems see lsquoPensions at a Glance 2011rsquo OECD 2011 ii As the survey was carried out online the survey results in China are based toward people living in urban areas iii ldquoPensions Marketsrdquo TheCityUK March 2013 p9 iv Global Employment Trends for Youth 2013 A generation at risk International Labour Organisation 2013 p2 v Eurostat July 2013 vi OECD Employment and Labour Markets Key Tables from OECD No 2 2012 vii The Federal Reserve Bank of New York 2012 Quarterly Report on Household Debt March 29 2013 viii World Bank ix lsquoWorld-class povertyrsquo The Economist February 27 2013
httpwwweconomistcomblogsanalects201302chinas-poor x lsquoThe Chinese slow down in char tsrsquo The Economist July 15 2013 xi lsquoChina rsquos welfare system difficult inflexible and blatantly unfairrsquo The Guardian April 23 2013
httpwwwtheguardiancomglobal-development2013apr23china-welfare-system-inflexible-unfair xii lsquo The Dutch experience with Defined Ambition pensions and the impact on companiesrsquo Aegon Global Pensions March 12 2013
httpwwwaegonglobalpensionscomenHomePublicationsNews-archiveNewsThe-Dutch-experience-with-Defined
Ambition-pensions-and-what-that-may-mean-for-companies-in-the-Netherlands-and-the-UK
shy
The Young Pragmatic and Penniless Generation | 34
Contact information HE ADQUARTER S
Aegon NV
PO Box 85
2501 CB The Hague
Telephone +31 70 344 32 10
w w waegoncom
MEDIA REL ATIONS
Telephone +31 70 344 89 56
Email gcc-iraegoncom
Countr y Index score
Germany 548
China 541
Canada 524
United States 519
The Netherlands 488
United Kingdom 486
Sweden 483
France 475
Hungar y 473
Poland 463
Spain 440
Japan 430
Total 489
Appendix 1 Aegon Retirement Readiness Index (ARRI) - technical note
Aegon Retirement Readiness Index (ARRI)-technical note 2013 Weightings (2012 in brackets) A sample of 12000 pre and post retirees was drawn from 1 Personal responsibilit y 20 (30)
twelve countries Of these 10800 (90) were pre-retirees 2 Level of awareness 30 (35)
and these were chosen for fur ther analysis of their plans 3 Financial capability Understanding 30 (25)
for retirement The Index that was developed forms an 4 Retirement planning 50 (50)
assessment of how well an individual perceives the adequacy 5 Financial preparedness 60 (60)
of his her own finances and financial awareness specifically 6 Income replacement 35 (35)
for addressing his retirement needs
Note that the weights devised to show the relative
The lsquotargetrsquo for the Index impor tance of each question in calculating the Index add to
The question on current savings activity was designated as the 225 These were then re-scaled so that a final scale of 1 to
target question (dependent variable) for predicting the level of 10 was calculated
preparedness for retirement Responses to this question were
then correlated with each of the six key questions (variables) Final scores by country below to understand which were driving the activity These weightings were multiplied by the actual scores for each
This was done because it was not felt to be correct to give respondent for each of the six Index questions and aggregated
each of the six variables described below an equal weight as to obtain a provisional score This was then adjusted to
they appeared to have quite different relationships to the give countr y scores out of 1 to 10 (A score of 1 to 10 had
target question sufficient differentiation to be used as the scale for analysis)
1 Personal responsibilit y for income in retirement
2 Level of awareness of need to plan for retirement
3 F inancial capability Understanding of financial matters
regarding plans for retirement
4 Retirement planning Level of development of plans
5 Financial preparedness for retirement
6 Income replacement Level of projected income replacement
The weighting To estimate the statistical significance of the decline in overall
scores in this yearrsquos Index is theoretically incalculable
Two things have changed from 2012 to 2013
1 C anada and China have joined the sample
2 The new countries have thus influenced the weights of
emphasis placed on the 6 variables used to calculate
the score hence the weights attached to the complex
calculation have changed
However it is noticeable that for countries which were sampled
in both time periods the mean scores for the six individual
variables have almost invariably declined and on average more
than half of them have shown a significant level of decline
In particular the question lsquoDo you think you will achieve this
incomersquo has for all countries shown a significant level of
decline We thus hypothesize that the comparative results
show a significant decline
The Young Pragmatic and Penniless Generation | 36
Net
herl
ands
Net
herl
ands
Net
herl
ands
Ger
man
yG
erm
any
Ger
man
yBase 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
Better off 7 4 23 Sw
eden
Swed
en11 5 7 8 3 11 14 50 5
Swed
en
About the same 19 18 27 23 8 19 18 13 29 29 24 21 U
ntie
dU
ntie
dU
nite
d Worse off 66 74 41 58 79 69 71 76 51 47 21 55
Kin
gdom
Kin
gdom
Kin
gdom
Donrsquot know 9 3 9 9 9 4 4 8 9 10 6 19
Fran
ceFr
ance
Fran
ce
Chart 2 Education of 20 ndash 29 year olds by country Q Please choose from the following list the highest level of educational or professional qualification you have
Spai
nSp
ain
Spa
in
Pol
and
Pol
and
Pol
and
Hun
gary
Hun
gary
Hun
gar y
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
dU
nite
d 100 100 100 100 100 100 100 100 100
Stat
es100 100 100
Stat
esSt
ates
Less than high school graduate 2 44 6 14 1 3 2 7 1 3 Ca
nada
Cana
daC
anad
aHigh school graduate 11 33 53 23 22 22 4 41 14 21 1 2
Some college or trade school 46 2 9 9 9 19 37 14 28 20 4 33 Ch
ina
Chin
aC
hina
College degree University degree 31 15 27 30 41 43 21 33 50 46 9 57
Postgraduate degree or 8 3 3 23 25 11 36 1 8 9 80 6 qualification Ja
pan
Japa
n Ja
pan
Other 2 4 1 1 1 2 0 5 0 6 2
None 0 1 1 0 1 0 0
NET Less than undergrad degree 61 82 70 47 34 46 43 66 42 45 11 37
NET Undergrad degree or higher 39 18 30 53 66 54 57 34 58 55 89 63
Chart 3 Aegon Retirement Readiness Index scores for young employees by country
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
NET Low Index (0-5) 80 64 79 81 85 78 81 73 65 61 61 87
NET Medium Index (6-7) 15 30 18 15 14 21 17 23 25 31 31 12
NET High Index (8-10) 4 6 3 3 1 2 2 4 10 8 7 1
Appendix 2 Country comparisons Chart 1 The majority of young employees believe that they will be worse off in retirement compared to their parents Q Do you think that future generations of retirees will be better off or worse off than those currently in retirement
37 | The Young Pragmatic and Penniless Generation
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsI always make sure that 27 34 27 26 17 14 19 22 35 33 32 20 I am saving for retirement
I only save for retirement G
erm
any
Ger
man
y21 27 20 13 17 21 16 6 17 24 20 24 occasionally from time to time
I am not saving for retirement now 6 11 8 11 5 15 9 4 10 8 9 5 although I have in the past Sw
eden
Swed
en
I am not saving for retirement 35 23 34 46 53 40 49 54 36 33 38 46 though I do intend to U
nite
dU
ntie
dK
ingd
omK
ingd
om I have never saved for retirement and 11 6 10 5 8 10 6 13 3 2 1 6 donrsquot intend to
Fran
ceFr
ance
Chart 5 Younger people are more likely not to be using any means of retirement savings Sp
ain
Spai
nQ Which financial means if any are you currently using to prepare for your retirement
Pol
and
Pol
and
only asked in Germany only asked in Spain
Hun
gary
Hun
gary
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
dSt
ates
Stat
es100 100 100 100 100 100 100 100 100 100 100 100
Defined benefit plan 16 10 25 29 15 3 76 11 20 13 5 Ca
nada
Cana
daDefined contribution plan 28 10 17 19 19 14 10 23 40 7 3
Private pension 8 18 14 10 5 9 4 13 12 40 66 4 Ch
ina
Chin
a Government pension social security 12 43 14 21 8 7 4 18 27 33 71 35
Stocks 5 12 14 7 4 17 7 2 13 10 23 9
Bonds 1 8 5 6 2 16 4 2 8 13 14 3 Ja
pan
Japa
n
Mutual funds 2 14 23 4 2 10 3 4 7 16 9 6
Investment insurances (annuities) 2 3 2 3 2 9 4 5 2 4 6 1
Savings accounts 23 37 38 25 23 6 29 15 36 37 65 36
Investment property 2 10 6 7 9 2 5 2 5 11 18 1
Employee stock purchase 1 1 1 4 1 29 0 4 1 7 1
My home 10 5 8 7 7 8 4 6 6 14 30 1
Reverse mortgage 1 4 2 4
My business 2 1 3 2 2 4 1 1 2 4 12 1
Inheritance 3 11 7 11 7 9 9 8 7 9 6 2
Annuities 1 15 2 2 1 4 3 2 1 2 8
Long-term care insurance 2 1 3 2 9 5 1 6 4 7 1
Life insurance 6 11 8 8 14 3 18 15 19 18 36 17
Unterstuumltzungskasse aus 2 Eigenmitteln finanziert
Unterstuumltzungskasse vom 2 Arbeitgeber finanziert
Chart 4 Younger employees are much more likely to aspire to save for retirement Which of the following best explains your approach to saving for retirement This can include money you contribute to any long-term
investment including pensions stocks and shares investment-linked insurances property etc
Q
The Young Pragmatic and Penniless Generation | 38
Plan de empleo mixto 2 (combinacioacuten de las dos anteriores)
Other 1 6 4 0 1 2 2 3 2 2 3 3
None nothing 8 14 12 23 25 31 6 27 21 17 3 24
Donrsquot know 29 6 17 13 19 8 4 9 7 7 0 9
hart 6 The younger generation has more negative associations of retirement Which if any of the following words do you most associate with retirement
Net
herl
ands
Net
herl
ands
Ger
man
yG
erm
any
Swed
enSw
eden
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
d100 100 100 100 100 100 100 100 100 100 100 100
Kin
gdom
Kin
gdom
Freedom 35 32 36 39 19 26 11 20 35 40 37 33
Opportunity 7 27 25 18 4 8 9 10 17 16 9 16 Fr
ance
Fran
ceLeisure 58 48 36 41 23 24 43 32 50 50 55 6
Excitement 2 5 3 8 2 6 1 2 17 17 4 3 Sp
ain
Spai
nPoverty 11 26 23 11 26 14 37 44 7 5 6 20
Insecurity 34 24 18 16 20 18 35 56 10 9 18 44 P
olan
dP
olan
dLoneliness 4 10 17 16 12 7 11 8 5 9 20 12
Ill health 2 19 7 14 15 9 49 23 6 6 29 11 H
unga
ryH
unga
ryDependent on others 11 11 5 18 14 8 18 19 14 6 11 4
Tired 3 4 8 10 14 10 17 6 7 7 13 19 U
nite
dU
nite
dFar away 38 19 25 21 61 32 2 13 33
Stat
es33 14 22
Stat
es
Boredom 14 16 6 12 16 12 15 8 12 12 16 17 Ca
nada
Cana
daEnjoyment 21 16 17 23 14 29 5 3 37 37 35 15
None of the above 0 1 1 2 0 2 1 1 2 2 1 2
Donrsquot know 2 2 3 3 2 2 1 2 0 Ch
ina
6 Ch
ina
hart 7 Many young employees think they are not on course to achieve target retirement income Ja
pan
Japa
n Do you think you will achieve this income [your estimated income needed in retirement]
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
I donrsquot know if I am on course to 56 37 57 59 50 39 49 48 48 41 22 68 achieve my retirement income
No I am on course to achieve around one-quarter (25) of my 10 14 9 13 15 14 14 13 10 10 10 7 retirement income
No I am on course to achieve around 12 20 14 11 19 19 18 15 12 11 23 12 half of my retirement income
No I am on course to achieve around three-quarters (75) of my 8 14 7 4 8 15 9 8 6 11 20 5 retirement income
Yes I am on course to achieve my 15 15 13 14 8 13 11 17 25 27 25 8 retirement income
CQ
CQ
39 | The Young Pragmatic and Penniless Generation
Chart 8 Young people in most countries expect to retire before 65 Q At what age do you expect to retire from all paid employment
Net
herl
ands
Ger
man
y
Swed
en
Uni
ted
Kin
gdom
Fran
ce
Spai
n
Pol
and
Hun
gary
Uni
ted
Stat
es
Cana
da
Chin
a
Japa
n
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
40 or under 0 1 1 0 0 1 3 1 5 12
41-50 1 2 3 5 2 2 6 3 9 4 37 9
51-59 4 4 4 6 2 4 11 5 7 10 30 1
60 5 11 8 12 10 13 19 12 12 16 21 27
61-64 2 11 10 2 20 7 4 13 5 3 1 2
65 17 22 44 31 34 32 16 26 26 32 3 25
66-69 42 32 15 9 12 29 20 13 9 9 0 1
70 19 11 10 18 10 5 10 9 13 12 0 6
71+ 5 5 5 9 4 5 5 3 7 5 1 4
Never 2 1 1 2 2 2 6 4 1 0 0
Donrsquot know 2 3 2 5 3 2 8 9 5 5 1 13
Mean 67 65 65 65 64 65 63 64 63 64 53 59
Median 67 65 65 65 65 65 65 65 65 65 55 60
Chart 9 Younger employees feel they donrsquot have money to invest for retirement Q What is the single biggest obstacle to you saving for retirement right now
Net
herl
ands
Ger
man
y
Swed
en
Uni
ted
Kin
gdom
Fran
ce
Spai
n
Pol
and
Hun
gary
Uni
ted
Stat
es
Cana
da
Chin
a
Japa
n
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
The uncertain economic environment 19 8 13 9 13 19 11 14 12 9 29 27
Lack of money to invest 28 41 33 43 47 34 48 55 47 50 6 19
Fear of poor investment returns over the coming years 2 5 10 7 5 6 8 2 6 8 14 6
Complexity of investment products 4 4 4 3 5 3 5 2 12 5
I donrsquot know how to go about investing for the long-term 2 3 10 8 5 5 3 3 6 8 7 9
The fees charged by financial services companies 2 4 4 2 4 3 4 2 3 5 2 5
I canrsquot afford to take financial advice 3 3 6 8 2 4 3 5 3 2 3 2
I donrsquot trust the financial services industry 12 11 8 6 5 10 6 2 2 3 5 4
I donrsquot see the need to save for the long-term 6 1 2 2 3 3 3 1 2 1 4 3
Concerns about unstable currencies currency fluctuations 2 5 1 3 3 3 4 3 4 5 15 2
Other (PLEASE STATE) 3 3 1 1 3 2 4 6 2 2 1
Donrsquot know 17 12 11 7 8 6 3 6 8 6 3 17
The Young Pragmatic and Penniless Generation | 40
Chart 10 More money would incentivize young employees to save for retirement Q Which if any of the following would encourage you to save for retirement
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsMore generous tax breaks on long-term savings and pensions 20 44 30 32 27 23 42 42 33 43 40 32 products
Ger
man
yG
erm
any
Access to financial education so that I am more aware of what 24 6 14 21 16 22 21 12 23 24 43 25 I need to do for myself
Swed
enSw
eden
Access to professional financial advice so that I have personalized
Uni
ted
20 24 23 23 15 21 25 9 22 23 44 13 U
nite
drecommendations on what steps
Kin
gdom
Kin
gdom
I need to take
Simpler investment products that 12 33 19 28 20 Fr
ance
18 27 16 32 28 36 10 Fr
ance
I can understand with less jargon
Better and more frequent information about my retirement 16 28 20 27 27 23
Spai
n20 18 25 31 45 22
Spai
nsavings
Better legal protection in case I am 12 18 13 18 10 24 18 13 13 19 21 6 P
olan
dP
olan
dsold the wrong product
A pay rise 46 54 44 64 55 50 70 72 67 64 53 37
A better retirement plan pension H
unga
ryH
unga
ry27 32 25 33 29 26 42 35 39 44 33 32 match from my employer
Other 4 2 1 1 2 2 3 3 2 U
nite
d3 0
Uni
ted
Stat
esSt
ates
Donrsquot know 17 9 16 10 10 12 3 8 8 5 3 17
Not applicable - I already have 3 3 4 2 2 1 1 1 2 2 3 sufficient savings Ca
nada
Cana
da
Chin
aCh
ina
Chart 11 A majority of younger employees do not have a written plan for retirement Q Which of the following best describes your retirement planning strategy
Japa
n Ja
pan
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
I have a written plan 7 18 10 9 6 8 6 5 13 10 8 4
I have a plan but it is not written 24 47 37 25 23 31 29 31 37 44 55 24
down
I do not have a plan 61 32 51 61 62 55 62 58 45 42 34 61
Donrsquot know 7 3 3 5 8 6 3 6 4 4 3 12
41 | The Young Pragmatic and Penniless Generation
Chart 12 For young employees friends and family are the leading source of retirement savings information Q And which of these sources (of information) is most important to you
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
Bank adviser 6 11 19 5 25 5 7 4 3 17 10 2 N
ethe
rlan
dsN
ethe
rlan
dsProfessional financial adviser 12 22 10 12 10 19 19 22 21 25 19 10
Insurance agent spokesperson 3 10 2 3 1 3 6 2 3 0 3 2 G
erm
any
Ger
man
yInsurance company website 3 1 3 2 4 4 2 2 1 3 1
Personal finance websites online 8 5 7 8 5 4 10 8 12 6 10 8 retirement planning tools Sw
eden
Swed
enPersonal finance media 2 2 2 2 2 6 3 1 2 1 6 2
Government website 7 1 3 6 U
nite
d5 2 3 3 2 3 7 1
Uni
ted
Kin
gdom
Kin
gdom
Bank website 2 3 3 2 1 0 3 2 1 6 3 3
My employer 12 8 4 9 4 7 5 12 8 5 4 1 Fr
ance
Fran
ceAccountant 2 6 4 4 1 3 1 3 5 5 1 3
Lawyer 2 3 1 2 2 8 4 2 1 2 2 0 Sp
ain
Spai
nFriends and family 21 22 30 28 24 26 18 24 26 20 25 24
None of these P
olan
dP
olan
dNot applicable 21 7 16 18 19 13 17 15 14 9 5 41
Hun
gary
Hun
gary
Chart 13 Most young workers feel their employer should provide some kind of pension Q In the future what if anything should employers do to help people plan for retirement
Uni
ted
Uni
ted
Stat
esSt
ates
Cana
daCa
nada
Chin
aCh
ina
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 Ja
pan
Japa
n Employers should be required to 24 43 20 40 21 26 20 28 37 34 20 30 contribute to workersrsquo pensions
Employers should be required to make a pension available but not to 12 13 7 17 20 15 15 4 11 14 22 5 contribute into it
Employers should not be required to provide pensions but should 15 9 12 8 9 8 11 6 11 9 9 11 provide information on how to plan for retirement
Employers should provide a range of flexible benefits and 13 18 18 16 15 27 25 28 21 22 45 12 allow individuals to choose which benefits they actually want
Nothing ndash it should be left to individual employees to take care 2 2 5 1 4 3 3 5 6 5 1 9 of themselves
Nothing ndash it should be left to the government to take care of its 2 5 5 2 5 8 15 14 1 4 0 4 citizens
Donrsquot know 30 10 32 17 27 12 12 15 13 13 3 29
The Young Pragmatic and Penniless Generation | 42
Chart 14 Workplace pensions are relatively low down in young workersrsquo priorities when choosing a job Q How important to you would the following workplace benefits be if you were choosing your next job
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsBasic salary 86 93 88 91 88 92 90 94 90 93 96 94
Holiday entitlement 87 94 89 91 92 94 91 94 93 94 96 91 G
erm
any
Ger
man
yOvertime and bonus pay 86 93 87 88 89 90 89 94 90 91 97 90
Location of workplace 88 91 86 92 89 90 89 92 93 93 92 86 Sw
eden
Swed
enMedical health insurance 73 92 84 65 86 87 88 87 93 94 98 83
Opportunities for career progression 86 91 81 90 90 94 91 94 92 91 96 81 U
nite
dU
nite
dAccess to a workplace retirement 85 85 81 82
Kin
gdom
78 84 80 78 84 86 93 74 K
ingd
omplan with employer contributions
Access to good training provision 85 87 85 88 86 91 85 93 86 90 95 74 Fr
ance
Fran
ceFlexible working hours 79 87 58 86 81 89 81 87 91 91 92 57
Life insurance 72 75 79 69 80 82 Sp
ain
84 80 81 88 93 74 Sp
ain
(death in service benefits)
Phased retirement or other employer programs providing for 74 54 75 71 72 81 76 74 76 81 91 65
Pol
and
Pol
and
a transition into retirement
Ability to work past the normal 68 57 64 65 64 74 72 65 74 76 80 70 retirement age H
unga
ryH
unga
ry
Access to a workplace retirement 62 74 61 68 59 77 61 47 68 74 89 65 plan without employer contributions U
nite
dU
nite
dSt
ates
Stat
esEmployee share plans 50 72 54 65 59 73 61 51 64 73 91 55
Access to creche help with the 67 75 64 56 69 79 75 83 58 69 89 68 cost of childcare Ca
nada
Cana
da
Opportunities for foreign travel 53 54 60 55 50 71 58 66 57 61 79 37
Company car 51 46 45 47 49 63 51 49 36 49 69 Ch
ina
39 Ch
ina
Japa
n Ja
pan
Chart 15 Young workers think the state pension will need to be reformed Q With the cost of government pensions becoming a greater concern as people live longer which if any of the following do you think
the government should undertake
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
The government should reduce the overall cost of state pension 15 33 16 15 16 20 28 22 21 26 30 16 provision by reducing the value of individual pension plans
The government should increase overall funding available for the 12 21 30 22 14 34 19 26 21 18 29 10 state pension through raising taxes
43 | The Young Pragmatic and Penniless Generation
he government should take a alanced approach with some 27 26 12 30 28 23 24 16 34 31 38 41 eductions in individual payments nd some increases in tax
he government should not do nything State pension provision 7 2 12 5 3 4 3 3 5 4 0 5 ill remain perfectly affordable in he future
onrsquot know 38 19 29 29 39 20 26 34 19 21 4 28
Net
herl
ands
art 16 Products which protect against investment risk are the most important to young workers ( interested) Thinking about the types of financial products you could purchase to help provide you with security in retirement on a scale of 1 to 5
how interested are you in the following options G
erm
any
Swed
en
Uni
ted
Kin
gdom
ase 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 Fr
ance
100 100 100 100 100 100 100 100 100 100 100 100
product providing a guaranteed etirement income stream or 75 81 73 76 74 83 78 76 87 85 94 69
Spai
nifetime income in retirement
product which protects my 74 79 73 76 72 82 77 74 84 86 94 65 etirement income against inflation P
olan
d
product which guarantees that I 72 82 73 78 75 81 76 73 86 86 90 67 onrsquot lose my initial investment H
unga
ry product which helps meet the ost of long-term care if I become 74 79 74 77 70 79 76 71 86 85 84 66
Uni
ted
nable to look after myself St
ates
product which protects my capital 71 81 71 76 68 76 77 73 84 83 93 65 rom poor investment returns Ca
nada
product which generates a etirement income and allows 69 78 71 75 68 81 77 72 84 86 94 70 e to take a lump sum from the
Chin
anvestment should I need to
product where the annual 66 78 68 75 72 79 77 70 85 86 87 64 anagement charges are kept low Ja
pan
product which enables me to eep some control over how my 71 73 70 75 72 80 75 69 88 85 91 63 avings are invested during my etirement
product which manages the sset allocation so that I am never 68 70 67 73 66 76 71 67 80 83 95 60 xposed to a level of risk Irsquom not omfortable with
product which continues to rovide a retirement income to my 74 78 71 75 73 81 79 73 86 82 94 60 pouse in the event that I die first
product which protects my family gainst having to pay estate taxes 73 76 71 74 75 81 75 69 82 82 89 56 hen I die
product which locks in investment 72 71 63 73 64 71 59 56 81 84 89 61 eturns during the good years
Tbra
Tawt
D
ChQ
B
Arl
Ar
Ad
Acu
Af
Armi
Am
Aksr
Aaec
Aps
Aaw
Ar
The Young Pragmatic and Penniless Generation | 44
35 25 20 19 12 9 27 41 7 7
I always make sure I only save for I am not saving for I am not saving for I have never saved that I am saving retirement occasionally retirement now although retirement though for retirement and for retirement from time to time I have in the past I do intend to donrsquot intend to
All 20 to 29 year olds
NET Low Index (0-5)
NET Medium Index (6-7)
NET High Index (8-10)
Chart 7 Younger employees are much more likely to aspire to save for retirement but the majority are not saving Q Which of the following best explains your approach to saving for retirement This can include money you contribute to any
long-term investment including pensions stocks and shares investment-linked insurances property etc
Other findings support the assertion that younger savers This can be seen in Chart 8 More 20-29 year olds claim that
are open to increasing their retirement savings Over a third they are not likely to be saving for retirement by any means
(37) of 20-29 year olds feel lsquovery responsiblersquo for ensuring (17 against 12 for all adults) and are generally less likely
a sufficient retirement income Note however that this does to use any of the savings products mentioned Revealingly
not translate into better developed financial plans and savings 20-29 year olds are far less likely to name lsquogovernment benefits
strategies Only 7 in this age group feel they have lsquowell in retirementrsquo as a source of retirement income although almost
developedrsquo personal retirement plans and 33 say they are all respondents have some such entitlement This may be due
lsquohardly saving anythingrsquo for retirement Clearly awareness of the to unawareness of government benefits and or greater
retirement situation does not translate into actual retirement scepticism about governmentsrsquo ability or willingness to
planning activity provide for them in old age
The Young Pragmatic and Penniless Generation | 14
Chart 8 Younger people are more likely not to be using any means of retirement savings Q Which financial means if any are you currently using to prepare for your retirement
33 Savings accounts 31
36 Government pension social security 24
25 Defined benefit plan 21
22 Private pension 17
23 Defined contribution plan 15
20 Life insurance 15
14 Stocks 10
14 My home 9
12 Mutual funds 8
9 Inheritance 7
9 Bonds 7
8 Investment property 7
5 Employee stock purchase 5
5 Investment insurances (annuities) 4
4 Long-term care insurance 4
6 Annuities 3
My business 2 3
Reverse mortgage 1 1
Other 3 2
12 None nothing 17
6 Donrsquot know 10
All 20 to 29 year olds
Leisure
Freedom
Far away
Insecurity
Enjoyment
Poverty
Ill health
Boredom
Opportunity
Dependent on others
Loneliness
Tired
Excitement
None of the above
Donrsquot know
Retirement associations What does the younger generation feel about retirement and want to get out of it Perhaps unsurprisingly 20-29 year olds are more
likely to be negative than older respondents associating retirement with boredom loneliness and ill health They are also far more
likely to believe retirement is lsquofar awayrsquo which is likely to be a barrier to retirement saving
15 | The Young Pragmatic and Penniless Generation
Chart 9 The younger generation has more negative associations with retirement Q Which if any of the following words do you most associate with retirement
44 Leisure 39
36 Freedom 30
17 Far away 26
25 Insecurity 25
25 Enjoyment 21
19 Poverty 19
15 Ill health 17
9 Boredom
13
16 Opportunity
13
10 Dependent on others
12
9 Loneliness
11
0
r olds
7Tired
1
6Excitement
6
2None of the above
1
2Donrsquot know 2
All 20 to 29 yea
Aspirations and responsibilities for retirement Income levels in retirement ung people have similar retirement aspirations to the general A high proportion (47) do not know if they are on course
pulation for example travel (63) spending time with to achieve their retirement income goal Combined with the
iends and family (61) and pursuing new hobbies (52) high level of financial responsibility young employees expect
r them however retirement also includes the responsibility of to assume in retirement it is clear that people not only need
ring for others Two-fifths (40) believe that lsquoadult children to build much greater awareness of what kind of financial
retirees should help through providing financial support to pressures they are likely to face in retirement but also require
eir parents if neededrsquo and 28 believe that this will affect greater support in establishing realistic retirement income
em directly in retirement through providing financial support targets which are capable of meeting their needs
their parents A fifth (21) also expect to spend some of
eir retirement caring for other family members while just
donrsquot expect to provide for anyone compared to 40 of all
ployees Clearly todayrsquos young employees anticipate serious
ancial responsibilities in their retirement
Yo
po
fr
Fo
ca
of
th
th
to
th
30
em
fin
The Young Pragmatic and Penniless Generation | 16
Chart 10 Many young employees do not think that they are on course to achieve target retirement income Q Do you think you will achieve this income [your estimated income needed in retirement]
Base 20-29 year olds
Yes I am on course to achieve my retirement
income
16
47
12
16
10
I donrsquot know if I am on course to achieve my
retirement income
No I am on course to achieve around
one-quarter (25) of
No I am on course to achieve around half of my
retirement income
No I am on course to achieve around
three-quarters (75) of my retirement income
532
China
586
Japan
United S
tate
s
628
Poland
635
Canad
a
636
Hunga
r
638
y
Fran
ce
645 647
Spain
Sweden
649
United K
ingdom
651
Germ
any
653
Nether
lands
666
my retirement income
When will young people retire Media reports about the need to raise the age of retirement appear to have influenced younger employees Fully 44 of 20-29 year
olds do not expect to be able to choose their retirement date although the younger generation do expect to retire at a similar age
to older employees 63 This varies considerable by country In the Netherlands young employees expect to retire eight years later
than those in Japan Some countries such as China and Japan have surprisingly low expected retirement ages suggesting that young
employees may benefit from having a better understanding of when government or workplace retirement benefits kick in
Chart 11 Young people in most countries expect to retire before 65 Q At what age do you expect to retire from all paid employment
Base 20-29 year olds
Despite expecting to retire at the same age as their parents younger employees are more open to a transition into retirement
reflecting their more flexible outlook toward work Around half (51) are happy to change the way they work in some way as they move
into retirement Just 8 expect to keep working as they do currently
17 | The Young Pragmatic and Penniless Generation
Part 3 What is holding young employees back Insights into what young employees feel is holding them back from saving or saving more can be used to encourage younger people to adopt more positive savings behaviors This chapter explores the attitudes of young employees toward the financial obstacles they face and asks what actions they have taken in preparation for retirement The findings reveal that while the majority lacks adequate planning for their retirement needs financial shortcomings are only part of the stor y Spending preferences play a key role in the savings gap of advanced economies
The Young Pragmatic and Penniless Generation | 18
Lack of money to invest 37
16 The uncertain economic environment
7 Fear of poor investment returns over the coming years
6 I donrsquot trust the financial services industry
6 I donrsquot know how to go about investing for the long-term
4 oncerns about unstable currencies currency fluctuations
4 Complexity of investment products
4 I canrsquot afford to take financial advice
3 The fees charged by financial services companies
3 I donrsquot see the need to save for the long-term
Other 2
Donrsquot know 8
A pay rise
More generous tax breaks on long-term savings and pensions products
A better retirement plan pension match from my employer
Better and more frequent information about my retirement savings
Simpler investment products that I can understand with less jargon
Access to professional financial advice so that I have personalized recommendations on what steps I need to take
Access to financial education so that I am more aware of what I need to do for myself
Better legal protection in case I am sold the wrong product
Other
Not applicable - I already have sufficient savings
Donrsquot know
Obstacles and incentives to saving
Chart 12 Younger employees feel they donrsquot have money to invest for retirement Q What is the single biggest obstacle to you saving for retirement right now
Base 20-29 year olds
C
What is the single biggest obstacle preventing twentysomethings that they rank pressing and desirable life goals such as marriage
m saving for retirement Not having enough money to invest starting a family vacations and other leisure activities above the
top of the list cited by over a third (37) although this figure need to plan for retirement This suggests the savings gap is
ops to just 6 in the emerging market of China where mean preference-driven
omes are the lowest by far ($18000) suggesting that lack of
sh may be partly a state of mind Young employees in China The biggest obstacle to retirement savings cited by one-eighth
actually more worried about local concerns such as economic (13) of respondents is either not knowing how to invest for the
certainty (29) and currency instability (15) Behavioral long-term or the complexity of investment products charges and
ance has an impact too with the way young employees frame fees Ready solutions to this include improving young employeesrsquo
eir financial priorities creating its own obstacles to saving financial literacy about retirement planning and creating easier
many as 57 of 20-29 year olds believe that saving for access to professional financial advice
tirement is important but not a current priority suggesting
fro
is
dr
inc
ca
are
un
fin
th
As
re
19 | The Young Pragmatic and Penniless Generation
Chart 13 More money would incentivize young employees to save for retirement Q Which if any of the following would encourage you to save for retirement
Base 20-29 year olds
57 A pay rise
More generous tax breaks on long-term savings and pensions products
34
A better retirement plan pension match from my employer
33
Better and more frequent information about my retirement savings 26
Simpler investment products that I can understand with less jargon 24
Access to professional financial advice so that I have personalized recommendations on what steps I need to take 23
Access to financial education so that I am more aware of what I need to do for myself 22
Better legal protection in case I am sold the wrong product 16
Other 2
Not applicable - I already have sufficient savings 2
Donrsquot know 10
Chart 14 Very few younger employees have a written plan for retirement Q Which of the following best describes your retirement planning strategy
Base 20-29 year olds
5 Donrsquot know I have a
written plan
8
34 I have a plan but it is not
52 written down
I do not have a plan
Turning to incentives greater remuneration predictably tops a list Retirement planning of what would encourage 20-29 year olds to save for retirement Retirement planning is essential to adequate retirement saving
More tellingly a third (33) would like their employer to provide although it is somewhat lacking in todayrsquos younger employees
a better retirement plan into which both parties contribute Over half (52) have no retirement planning strategy at all
Better information and simple products would also help more and only 8 have noted down their retirement strategy
people to save A quarter (26) would be encouraged to save by
better and more frequent information about retirement savings Nevertheless the respondents polled believe that the current
while a similar number (24) want simple investment products global economy makes retirement planning increasingly
that are easy to understand As with the previous question a important ndash 71 agreed with this statement It is clear from this
lack of investment knowledge and the complexity of investment that young people between the ages of 20 and 29 do not lack
products are revealed as obstacles to savings the will to save they lack the opportunity
The Young Pragmatic and Penniless Generation | 20
Part 4 Creating the right conditions for young employees to save How may young employeesrsquo obstacles to saving be overcome For retirement readiness this will be a defining question of the early twenty-first centur y ndash and an extremely challenging one given the number of serious issues affecting younger employeesrsquo finances What was learned in the previous chapter about encouraging young employees to save is a start This chapter examines which areas and triggers to saving can be unlocked and whether government employer or individual should take most responsibility
21 | The Young Pragmatic and Penniless Generation
Friends and family
Professional financial adviser
17
24
Bank adviser 9
Personal finance websites online retirement planning tools
My employer
Government website
4
8
7
Insurance agent spokesperson
Accountant
3
3
Personal finance media 3
Lawyer
Bank website
3
2
Insurance company website
Donrsquot know
2
15
Information and advice on retirement saving strong theme revealed by our findings is that younger This finding is remarkably consistent across the countries
mployees want more information on savings products and sur veyed despite significant differences in market makeup
etter access to advice The largest share 24 (compared although some differences exist For instance a quar ter
o 17 for all employees) finds friends and family to be the (25) of young employees in France turn to bank advisers
ost important source of advice followed by professional for financial information nearly triple the number among all
dvisers (17) and bank advisers (9) That young employees young people (9)
urn to friends and family first suggests an unmet need for
rofessional financial advice This is both a challenge and an
pportunity for the financial ser vices sector
hart 15 For young employees friends and family are the leading source of retirement savings information Which of these sources (of information) is most important to you
ase 20-29 year olds
A
e
b
t
m
a
t
p
o
CQ
B
What is the role of the workplace in retirement planning Does this influence what retirement benefits younger
In response to shifting employment patterns todayrsquos younger employees expect from their workplace Certainly a majority
employees are less loyal to their employers than older workers favor workplace retirement plans with 61 believing that these
Fully 39 of 20-29 year olds are planning to look for a new job should be a fundamental part of pay (although this is lower
in the next 12 months compared to 29 of all workers and than for employees overall) and just 4 feel that retirement
31 frequently think about quitting their jobs Strikingly while planning should be left entirely to individuals
53 of all workers plan to stay with their current employer
until retirement just 37 of 20-29 year olds say this However there is evidence of a slight shift in perceptions
Younger workers are less likely to want workplace retirement
Doubtless much of this is because younger workers are more plans over other factors Of those who want employer
mobile and have more opportunities Another trigger to lower retirement plan contributions only 46 wanted this even if
employer loyalty may be the expectation of holding more jobs it reduced benefits and 35 (compared to 43 of all workers)
and even pursuing multiple careers over a working lifetime if it cut jobs
The Young Pragmatic and Penniless Generation | 22
Donrsquot know Employers should be
required to contribute to workersrsquo pensions
5 Nothing ndash it should be left to the government to take 18
care of its citizens 28
4 Nothing ndash it should be left to individual employees to
take care of themselves
13
22
Employers should provide a range of flexible benefits
and allow individuals to choose which benefits they
actually want
10 Employers should
be required to make a pension available but not
to contribute into it
Employers should not be required to provide pensions but should
provide information on how to plan for retirement
Chart 16 Most young workers feel that their employer should provide some kind of pension Q In the future what if anything should employers do to help people plan for retirement
Base 20-29 year olds
Are other workplace benefits more important Younger workers were asked to rate the importance of various workplace benefits The results reveal how highly they value the
elements of their compensation package Chart 17 shows that 87 of young employees believe a workplace retirement plan with
employer contributions would be an important factor when choosing their next job While retirement may be decades away for
twentysomethings 80 believe programs provide for a phased retirement are important
23 | The Young Pragmatic and Penniless Generation
Basic salary 94
93 Holiday entitlement
91 Overtime and bonus pay
91 Location of workplace
88 Medical health insurance
87 Opportunities for career progression
Access to a workplace retirement plan with employer contributions 87
Access to good training provision 86
Flexible working hours 85
Life insurance (death in service benefits) 81
Phased retirement or other employer programs providing for a transition into retirement 80
Ability to work past the normal retirement age 70
Access to a workplace retirement plan without employer contributions
67
Employee stock plans 65
Access to creche help with the cost of childcare 59
Opportunities for foreign travel 50
Company car 43
Chart 17 Workplace retirement plans are a relatively low priority for younger workers when choosing a job How important to you would the following workplace benefits be if you were choosing your next job
ase 20-29 year olds
Q
B
Regarding workplace benefits provided by employers today considered just enough to fulfill basic needs and in China a
young employees are about as likely as all workers to be offered fully formed nationwide retirement system is still some way off
retirement tools such as annual plan statements and online The future shape and affordability of these plans is debated in
tools from their employer though it is concerning that 24 do all of the sur vey countries to var ying degrees
not know if such tools are available or not Those provided are
considered helpful Younger workersrsquo views on reform are important because
changes to government retirement benefits are more likely
The role of government to affect them than any other part of the working population
The generosity of government retirement benefits varies The main concern cited by 57 is of facing less generous
considerably in the countries sur veyed In some countries such government retirement benefits than those enjoyed by their
as France government benefits are the primar y mechanism parentsrsquo generation
for funding retirement while in the United Kingdom they are
The Young Pragmatic and Penniless Generation | 24
The government should reduce the overall cost of state pension provision by
reducing the value of Donrsquot know individual pension plans
25 22
4 The government should not do anything State pension provision will
remain perfectly affordable in the future
28
21 The government should increase overall funding
available for the state pension through
raising taxes
The government should take a balanced approach with some reductions in individual payments and
some increases in tax
Chart 18 Young workers think that the government retirement system will need to be reformed Q With the cost of government retirement benefits becoming a greater concern as people live longer which
if any of the following do you think the government should undertake
Base 20-29 year olds
The younger generation believes that the government cannot What do young employees look for in a retirement product continue to provide as it does now ndash just 4 think government The sur vey findings show that young employees have
benefits will remain affordable to society However there is no reser vations about employer and government retirement
consensus on what governments should do to reform retirement benefits So what then do they want from a private savings
plan systems Over a fifth (22) think retirement entitlements product The savings product feature most valued by younger
should be cut just over a fifth (21) think governments should workers is protection against investment risk (Char t 19)
raise taxes and more than a quarter (28) think a mixture of This may be in the form of no loss of initial investment a
the two is the best solution Another quarter admits that they guaranteed income stream or protection against inflation
donrsquot know what should be done This is reasonable ndash the initial investment of those farthest
from retirement is most at risk However less consideration
is given to savings grow th through investment returns This
suggests that there is an oppor tunity to educate young
workers about the trade-off between returns and risk
management and what they stand to gain
25 | The Young Pragmatic and Penniless Generation
Chart 19 Products which protect against investment risk are the most important to young workers ( interested) Q Thinking about the types of financial products you could purchase to help provide you with security in retirement on a scale of 1 to 5
how interested are you in the following options
Base 20-29 year olds
A product providing a guaranteed retirement income stream or lifetime income in retirement 82
A product which protects my retirement income against inflation 81
A product which guarantees that I donrsquot lose my initial investment 81
A product which helps meet the cost of long-term care if I become unable to look after myself 80
A product which protects my capital from poor investment returns 79
A product which generates a retirement income and allows me to take a lump sum from the investment should I need to 79
A product where the annual management charges are kept low 78
A product which enables me to keep some control over how my savings are invested during my retirement 77
A product which manages the asset allocation so that I am never exposed to a level of risk Irsquom not comfortable with 76
A product which continues to provide a retirement income to my spouse in the event that I die first 75
A product which protects my family against having to pay estate taxes when I die 72
A product which locks in investment returns during the good years 70
The lsquodefined ambitionrsquo retirement system in This removes some of the disadvantages of leaving
the Netherlands a sustainable retirement solution retirement liabilities exclusively up to employers
for young workers (defined benefit) or employees (defined contribution)
In the Netherlands as elsewhere young workers are faced In the Netherlands this is likely to involve legislation which
with an increasing retirement age decreasing government lets retirement funds automatically adjust pay-outs and
suppor t for retirement and declining traditional defined retirement age as life expectancy changes xii
benefit employer retirement plans Reforms proposed
by the Dutch may show a way for ward for all mature and This model has garnered interest elsewhere In the
aging economies United Kingdom Pensions Minister Steve Webb expressed
interest on a more limited scale with a government
rsquoDefined ambitionrsquo proposes that risks are not taken on fully guarantee for a minimum rate of return for defined
by either employer or employee but are shared contribution retirement plans
The Young Pragmatic and Penniless Generation | 26
Recommendations Enabling young workers to save The studyrsquos findings reveal that the majority of young workers (66) are either saving consistently or aspire to start saving but face challenges including debt low pay and funding for significant life events and generational changes to the economic landscape and government and employer support If young people are to achieve a prosperous retirement their willingness to save should be met with better opportunities to save Here is what can be done by employers governments and young people themselves to address retirement planning concerns for younger adults
27 | The Young Pragmatic and Penniless Generation
Individuals Employers and governments
Determine how much income you need in retirement Auto-enroll employees into a workplace retirement plan Young people accept the need to save for retirement but donrsquot If an auto-enrollment workplace retirement plan is feasible
know how to act on that need They can become more retirement this can play a major role in getting young workers saving early
savvy simply by talking to friends and family (as do 24 of and regularly Combined with auto-escalation (the automatic
our respondents already) or employers going online to use annual increase in retirement plan contributions) and matching
retirement calculators or reading the personal finance media contributions it can lead to greater retirement readiness
Seek out a financial advisor Provide more flexible savings products through the workplace Young people are faced with life events that make it easy to Not all savings journeys start with a retirement plan particularly
feel overwhelmed by financial priorities in addition to retirement for young people who may think of retirement as lsquotoo far awayrsquo
planning Soliciting advice from a finance professional early in Employers can kick-start the savings habit in younger workers
life (17 of young employees have done so already) helps with by providing flexible easy to access and easy to understand
planning and priorities and making sense of long-term finances savings plans as a more attractive starter option
Start saving now and save consistently Make company retirement plans more portable As with all employees young people will strengthen their Young people move jobs much more often than previous
retirement readiness simply by saving regularly Today only 25 generations of employees so savings like DC retirement plans
of young people always save yet even small regular amounts need to follow employees when they change jobs
will improve retirement readiness over time
Make tax incentives more effective Ask your employer about workplace retirement savings plans All countries encourage long-term savings through tax relief but
and other retirement benefits young people often arenrsquot aware of this or donrsquot understand it
While one third (33) of young people believe that a workplace A more targeted system of tax relief could help provide clearer
retirement savings plan provides a major opportunity to start and simpler signals to younger people about the financial
saving employers often experience difficulties in engaging benefits of long-term saving
younger employees in discussions about retirement planning
The workplace is an important channel for achieving retirement Make better financial education central to the workplace readiness so be sure to max out on any employer contributions retirement offer
Young people who aspire to save may be prevented from
doing so by setting the wrong financial priorities Workplace
retirement education ndash alongside professional advice ndash can help
guide young people toward the right long-term priorities at an
earlier age in life
The Young Pragmatic and Penniless Generation | 28
29 | The Young Pragmatic and Penniless Generation
Glossary
Aegon Retirement Readiness Index (ARRI) c areer average retirement plan The ARRI assesses the relative levels of retirement A type of defined benefit plan that is based on an
preparedness of employees across different countries on a employeersquos average retirement earnings over the duration
scale from 1 to 10 The Index is based on three questions of plan membership Same as average salary plan
covering attitudes and three questions covering behaviors
defined ambition (DA) plan average salary plan A type of retirement plan in which retirement plan risks
A type of defined benefit plan that is based on an are shared between the employer and the employee
employeersquos average retirement earnings over the duration It offers greater certainty to savers around the final value
of plan membership Same as career average plan of their retirement assets than in DC plans and less
cost volatility for employers than with DB plans In the
a nnuity Netherlands Defined Ambition (DA) retirement plans are
A form of contract sold by life insurance companies that being introduced in order to help relieve the pressure on
guarantees a fixed or variable payment to the annuitant employers while still trying to provide employees with a
at some future time usually retirement All capital in the more secure retirement plan The United Kingdom too is
annuity grows tax-deferred looking at DA retirement plans as a solution
auto enrollment defined benefit (DB) plan An employer-sponsored retirement plan in which the An employer-sponsored retirement plan where the amount
employer is able to enroll an employee without that of future benefits an employee will receive from the plan is
employeersquos express authorization The employer determines defined typically by a formula based on salary history and
what percentage of the employeersquos salary or wages is years of service The amount of contributions the employer
contributed to the plan The employee is able to change is required to make will depend on the investment returns
this percentage and can opt out of enrollment in the plan experienced by the plan and the benefits promised
Contrast defined contribution plan
a uto-escalation A feature of a plan which automatically increases the defined contribution (DC) plan percentage of (retirement) funds saved from salary An employer-sponsored retirement plan such as a 401(k)
This feature generally uses a default or standard plan or a 403(b) plan in the United States in which
contribution escalation rate contributions are made to individual participant accounts
Depending on the type of DC plan contributions may be
B aby Boomers made by the employee the employer or both
A term used to refer to people generally born between
the end of World War II in 1945 and the mid 1960s The employeersquos benefits at retirement or termination of
Other generations Silent Generation - the generation born employment are based on the employee and employer
between 1925 and 1945 Generation X - the generation contributions and earnings and losses on those
born between 1965 and 1979 Millennials or Generation contributions See also 401(k) and 403(b) plan
Y - the generation born between 1980 and 2000 and often Contrast defined benefit plan
classified as the children of Baby Boomers
The Young Pragmatic and Penniless Generation | 30
401(k) plan An employer sponsored retirement plan that enables
employees to make tax-deferred contributions from their
salaries to the plan
403(b) plan An employer-sponsored defined contribution plan that
enables employees of universities public schools and
non-profit organizations to make tax-deferred contributions
from their salaries to the plan
final salary plan A type of defined benefit plan in which retirement
benefits are based on final retirement salary in the years
immediately before retirement benefits are received
Millennials A term used to refer to the people born from about 1980
to 2000 brought up using digital technology They are
often classified as the children of Baby Boomers
r etirement (or pension) plan Provides replacement for salary when a person is no
longer working due to retirement In the case of a defined
benefit retirement plan the employer or union contributes
to the plan which pays a predetermined benefit for the
rest of the employeersquos life based on length of service and
salary Payments may be made either directly or through
an annuity Retirement plan payments are taxable income
to recipients in the year received The employer or union
has fiduciary responsibility to invest the retirement plan
funds in stocks bonds real estate and other assets earn
a satisfactory rate of return and make payments to retired
workers Retirement plan funds holding trillions of dollars
are one of the largest investment forces in the stock
bond and real estate markets If the employer defaults in
the United States retirement plan payments are usually
guaranteed by the Pension Benefit Guaranty Corporation
(PBGC)
variable annuities (VA) An insurance contract in which the insurance company
guarantees a minimum payment at the end of the
accumulation period The payments may vary depending
on the financial performance of the managed portfolio
31 | The Young Pragmatic and Penniless Generation
About Aegon Transamerica Center for Retirement Studiesreg and Cicero Consulting
Aegon Transamerica Center Aegon is an international life insurance pensions and asset reg management company with businesses in over 20 markets for Retirement Studies in the Americas Europe and Asia Aegon companies employ The Transamerica Center for Retirement Studiesreg (TCRS) is
around 24000 people and serve millions of customers a division of the Transamerica Institute a nonprofit private
worldwide foundation TCRS is dedicated to educating the public on
wwwaegoncom emerging trends surrounding retirement security in the
United States TCRSrsquo research emphasizes employer-sponsored
In 2010 Aegon became a founding member of the Global retirement plans issues faced by small to mid-sized companies
Coalition on Aging which seeks to raise awareness of aging and their employees and the implications of legislative and
issues among policymakers and the general public A major aim regulatory changes Transamerica Institute is funded by
of the coalition is to transform the way we think and speak contributions from Transamerica Life Insurance Company and
about aging replacing the familiar rhetoric of lsquoproblemsrsquo with its affiliates and may receive funds from unaffiliated third-
a more positive discussion of lsquopossibilitiesrsquo and lsquoopportunitiesrsquo parties For more information about TCRS please refer to
wwwglobalcoalitiononagingcom wwwtransamericacenterorg
Cicero Consulting A leading consultancy firm serving the banking insurance and
asset management sector Cicero specializes in public policy
and communications consulting as well as global thought
leadership and independent market research Cicero was
established in 2001 and now operates from offices in London
Brussels Washington and Singapore As a market leader in
pensions and retirement research Cicero designed
and analyzed the research and contributed to the report
wwwcicero-groupcom
The Young Pragmatic and Penniless Generation | 32
Marta acebo Mark Green Patricia Plas
Paula alvarez douGlas henck scott roane
Frits bart wendel hoFMan thurstan robinson
Grace basile
lynette belFry
andrew berwick
Frans van der horst
tatsuo kai
herMan kaPPelle
Patti rowey
sarah russell
Joost van schaGen
robin boon Gaacutebor kePecs dick schiethart
bert-JaaP brons Marco keiM erik schouten
douG brooks
libby buet
kent callahan
JaiMe kirkPatrick
bas knol
roGer koch
anGela seyMour Jackson
kate sMith
renske stoker
Jeanne de cervens
dana chen
Peter kunkel
alexander kuiPers
eyleen sun
MartiJn tans
arkadiusz chMurzynski
heidi cho
brian lewis
Mike linder
GreG tucker
Mark twiGG
siMon clow siMon luke catherine wanG
robert colliGnon Jason Ma Marc van weede
catherine collinson GrzeGorz Mathea tiM willaert
wendy daniels
Michel denizot
edit drevenka
Paul Middleton
takaoh MiyaGawa
david Moulton
daniel wriGht
alex wynaendts
MacieJ zaPala
Jan driessen
kelly Fu
adrian Grace
Mark Mullin
Marcelle noltenius
stiG nybo
Peacuteter zatykoacute
vicky zeldin
Disclaimer This repor t contains general information only and does
not constitute a solicitation or offer No rights can be
derived from this repor t Aegon its par tners and any of
their affiliates or employees do not guarantee warrant
or represent the accuracy or completeness of the
information contained in the repor t
Acknowledgements
33 | The Young Pragmatic and Penniless Generation
References and notes i For a comparison of different retirement systems see lsquoPensions at a Glance 2011rsquo OECD 2011 ii As the survey was carried out online the survey results in China are based toward people living in urban areas iii ldquoPensions Marketsrdquo TheCityUK March 2013 p9 iv Global Employment Trends for Youth 2013 A generation at risk International Labour Organisation 2013 p2 v Eurostat July 2013 vi OECD Employment and Labour Markets Key Tables from OECD No 2 2012 vii The Federal Reserve Bank of New York 2012 Quarterly Report on Household Debt March 29 2013 viii World Bank ix lsquoWorld-class povertyrsquo The Economist February 27 2013
httpwwweconomistcomblogsanalects201302chinas-poor x lsquoThe Chinese slow down in char tsrsquo The Economist July 15 2013 xi lsquoChina rsquos welfare system difficult inflexible and blatantly unfairrsquo The Guardian April 23 2013
httpwwwtheguardiancomglobal-development2013apr23china-welfare-system-inflexible-unfair xii lsquo The Dutch experience with Defined Ambition pensions and the impact on companiesrsquo Aegon Global Pensions March 12 2013
httpwwwaegonglobalpensionscomenHomePublicationsNews-archiveNewsThe-Dutch-experience-with-Defined
Ambition-pensions-and-what-that-may-mean-for-companies-in-the-Netherlands-and-the-UK
shy
The Young Pragmatic and Penniless Generation | 34
Contact information HE ADQUARTER S
Aegon NV
PO Box 85
2501 CB The Hague
Telephone +31 70 344 32 10
w w waegoncom
MEDIA REL ATIONS
Telephone +31 70 344 89 56
Email gcc-iraegoncom
Countr y Index score
Germany 548
China 541
Canada 524
United States 519
The Netherlands 488
United Kingdom 486
Sweden 483
France 475
Hungar y 473
Poland 463
Spain 440
Japan 430
Total 489
Appendix 1 Aegon Retirement Readiness Index (ARRI) - technical note
Aegon Retirement Readiness Index (ARRI)-technical note 2013 Weightings (2012 in brackets) A sample of 12000 pre and post retirees was drawn from 1 Personal responsibilit y 20 (30)
twelve countries Of these 10800 (90) were pre-retirees 2 Level of awareness 30 (35)
and these were chosen for fur ther analysis of their plans 3 Financial capability Understanding 30 (25)
for retirement The Index that was developed forms an 4 Retirement planning 50 (50)
assessment of how well an individual perceives the adequacy 5 Financial preparedness 60 (60)
of his her own finances and financial awareness specifically 6 Income replacement 35 (35)
for addressing his retirement needs
Note that the weights devised to show the relative
The lsquotargetrsquo for the Index impor tance of each question in calculating the Index add to
The question on current savings activity was designated as the 225 These were then re-scaled so that a final scale of 1 to
target question (dependent variable) for predicting the level of 10 was calculated
preparedness for retirement Responses to this question were
then correlated with each of the six key questions (variables) Final scores by country below to understand which were driving the activity These weightings were multiplied by the actual scores for each
This was done because it was not felt to be correct to give respondent for each of the six Index questions and aggregated
each of the six variables described below an equal weight as to obtain a provisional score This was then adjusted to
they appeared to have quite different relationships to the give countr y scores out of 1 to 10 (A score of 1 to 10 had
target question sufficient differentiation to be used as the scale for analysis)
1 Personal responsibilit y for income in retirement
2 Level of awareness of need to plan for retirement
3 F inancial capability Understanding of financial matters
regarding plans for retirement
4 Retirement planning Level of development of plans
5 Financial preparedness for retirement
6 Income replacement Level of projected income replacement
The weighting To estimate the statistical significance of the decline in overall
scores in this yearrsquos Index is theoretically incalculable
Two things have changed from 2012 to 2013
1 C anada and China have joined the sample
2 The new countries have thus influenced the weights of
emphasis placed on the 6 variables used to calculate
the score hence the weights attached to the complex
calculation have changed
However it is noticeable that for countries which were sampled
in both time periods the mean scores for the six individual
variables have almost invariably declined and on average more
than half of them have shown a significant level of decline
In particular the question lsquoDo you think you will achieve this
incomersquo has for all countries shown a significant level of
decline We thus hypothesize that the comparative results
show a significant decline
The Young Pragmatic and Penniless Generation | 36
Net
herl
ands
Net
herl
ands
Net
herl
ands
Ger
man
yG
erm
any
Ger
man
yBase 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
Better off 7 4 23 Sw
eden
Swed
en11 5 7 8 3 11 14 50 5
Swed
en
About the same 19 18 27 23 8 19 18 13 29 29 24 21 U
ntie
dU
ntie
dU
nite
d Worse off 66 74 41 58 79 69 71 76 51 47 21 55
Kin
gdom
Kin
gdom
Kin
gdom
Donrsquot know 9 3 9 9 9 4 4 8 9 10 6 19
Fran
ceFr
ance
Fran
ce
Chart 2 Education of 20 ndash 29 year olds by country Q Please choose from the following list the highest level of educational or professional qualification you have
Spai
nSp
ain
Spa
in
Pol
and
Pol
and
Pol
and
Hun
gary
Hun
gary
Hun
gar y
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
dU
nite
d 100 100 100 100 100 100 100 100 100
Stat
es100 100 100
Stat
esSt
ates
Less than high school graduate 2 44 6 14 1 3 2 7 1 3 Ca
nada
Cana
daC
anad
aHigh school graduate 11 33 53 23 22 22 4 41 14 21 1 2
Some college or trade school 46 2 9 9 9 19 37 14 28 20 4 33 Ch
ina
Chin
aC
hina
College degree University degree 31 15 27 30 41 43 21 33 50 46 9 57
Postgraduate degree or 8 3 3 23 25 11 36 1 8 9 80 6 qualification Ja
pan
Japa
n Ja
pan
Other 2 4 1 1 1 2 0 5 0 6 2
None 0 1 1 0 1 0 0
NET Less than undergrad degree 61 82 70 47 34 46 43 66 42 45 11 37
NET Undergrad degree or higher 39 18 30 53 66 54 57 34 58 55 89 63
Chart 3 Aegon Retirement Readiness Index scores for young employees by country
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
NET Low Index (0-5) 80 64 79 81 85 78 81 73 65 61 61 87
NET Medium Index (6-7) 15 30 18 15 14 21 17 23 25 31 31 12
NET High Index (8-10) 4 6 3 3 1 2 2 4 10 8 7 1
Appendix 2 Country comparisons Chart 1 The majority of young employees believe that they will be worse off in retirement compared to their parents Q Do you think that future generations of retirees will be better off or worse off than those currently in retirement
37 | The Young Pragmatic and Penniless Generation
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsI always make sure that 27 34 27 26 17 14 19 22 35 33 32 20 I am saving for retirement
I only save for retirement G
erm
any
Ger
man
y21 27 20 13 17 21 16 6 17 24 20 24 occasionally from time to time
I am not saving for retirement now 6 11 8 11 5 15 9 4 10 8 9 5 although I have in the past Sw
eden
Swed
en
I am not saving for retirement 35 23 34 46 53 40 49 54 36 33 38 46 though I do intend to U
nite
dU
ntie
dK
ingd
omK
ingd
om I have never saved for retirement and 11 6 10 5 8 10 6 13 3 2 1 6 donrsquot intend to
Fran
ceFr
ance
Chart 5 Younger people are more likely not to be using any means of retirement savings Sp
ain
Spai
nQ Which financial means if any are you currently using to prepare for your retirement
Pol
and
Pol
and
only asked in Germany only asked in Spain
Hun
gary
Hun
gary
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
dSt
ates
Stat
es100 100 100 100 100 100 100 100 100 100 100 100
Defined benefit plan 16 10 25 29 15 3 76 11 20 13 5 Ca
nada
Cana
daDefined contribution plan 28 10 17 19 19 14 10 23 40 7 3
Private pension 8 18 14 10 5 9 4 13 12 40 66 4 Ch
ina
Chin
a Government pension social security 12 43 14 21 8 7 4 18 27 33 71 35
Stocks 5 12 14 7 4 17 7 2 13 10 23 9
Bonds 1 8 5 6 2 16 4 2 8 13 14 3 Ja
pan
Japa
n
Mutual funds 2 14 23 4 2 10 3 4 7 16 9 6
Investment insurances (annuities) 2 3 2 3 2 9 4 5 2 4 6 1
Savings accounts 23 37 38 25 23 6 29 15 36 37 65 36
Investment property 2 10 6 7 9 2 5 2 5 11 18 1
Employee stock purchase 1 1 1 4 1 29 0 4 1 7 1
My home 10 5 8 7 7 8 4 6 6 14 30 1
Reverse mortgage 1 4 2 4
My business 2 1 3 2 2 4 1 1 2 4 12 1
Inheritance 3 11 7 11 7 9 9 8 7 9 6 2
Annuities 1 15 2 2 1 4 3 2 1 2 8
Long-term care insurance 2 1 3 2 9 5 1 6 4 7 1
Life insurance 6 11 8 8 14 3 18 15 19 18 36 17
Unterstuumltzungskasse aus 2 Eigenmitteln finanziert
Unterstuumltzungskasse vom 2 Arbeitgeber finanziert
Chart 4 Younger employees are much more likely to aspire to save for retirement Which of the following best explains your approach to saving for retirement This can include money you contribute to any long-term
investment including pensions stocks and shares investment-linked insurances property etc
Q
The Young Pragmatic and Penniless Generation | 38
Plan de empleo mixto 2 (combinacioacuten de las dos anteriores)
Other 1 6 4 0 1 2 2 3 2 2 3 3
None nothing 8 14 12 23 25 31 6 27 21 17 3 24
Donrsquot know 29 6 17 13 19 8 4 9 7 7 0 9
hart 6 The younger generation has more negative associations of retirement Which if any of the following words do you most associate with retirement
Net
herl
ands
Net
herl
ands
Ger
man
yG
erm
any
Swed
enSw
eden
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
d100 100 100 100 100 100 100 100 100 100 100 100
Kin
gdom
Kin
gdom
Freedom 35 32 36 39 19 26 11 20 35 40 37 33
Opportunity 7 27 25 18 4 8 9 10 17 16 9 16 Fr
ance
Fran
ceLeisure 58 48 36 41 23 24 43 32 50 50 55 6
Excitement 2 5 3 8 2 6 1 2 17 17 4 3 Sp
ain
Spai
nPoverty 11 26 23 11 26 14 37 44 7 5 6 20
Insecurity 34 24 18 16 20 18 35 56 10 9 18 44 P
olan
dP
olan
dLoneliness 4 10 17 16 12 7 11 8 5 9 20 12
Ill health 2 19 7 14 15 9 49 23 6 6 29 11 H
unga
ryH
unga
ryDependent on others 11 11 5 18 14 8 18 19 14 6 11 4
Tired 3 4 8 10 14 10 17 6 7 7 13 19 U
nite
dU
nite
dFar away 38 19 25 21 61 32 2 13 33
Stat
es33 14 22
Stat
es
Boredom 14 16 6 12 16 12 15 8 12 12 16 17 Ca
nada
Cana
daEnjoyment 21 16 17 23 14 29 5 3 37 37 35 15
None of the above 0 1 1 2 0 2 1 1 2 2 1 2
Donrsquot know 2 2 3 3 2 2 1 2 0 Ch
ina
6 Ch
ina
hart 7 Many young employees think they are not on course to achieve target retirement income Ja
pan
Japa
n Do you think you will achieve this income [your estimated income needed in retirement]
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
I donrsquot know if I am on course to 56 37 57 59 50 39 49 48 48 41 22 68 achieve my retirement income
No I am on course to achieve around one-quarter (25) of my 10 14 9 13 15 14 14 13 10 10 10 7 retirement income
No I am on course to achieve around 12 20 14 11 19 19 18 15 12 11 23 12 half of my retirement income
No I am on course to achieve around three-quarters (75) of my 8 14 7 4 8 15 9 8 6 11 20 5 retirement income
Yes I am on course to achieve my 15 15 13 14 8 13 11 17 25 27 25 8 retirement income
CQ
CQ
39 | The Young Pragmatic and Penniless Generation
Chart 8 Young people in most countries expect to retire before 65 Q At what age do you expect to retire from all paid employment
Net
herl
ands
Ger
man
y
Swed
en
Uni
ted
Kin
gdom
Fran
ce
Spai
n
Pol
and
Hun
gary
Uni
ted
Stat
es
Cana
da
Chin
a
Japa
n
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
40 or under 0 1 1 0 0 1 3 1 5 12
41-50 1 2 3 5 2 2 6 3 9 4 37 9
51-59 4 4 4 6 2 4 11 5 7 10 30 1
60 5 11 8 12 10 13 19 12 12 16 21 27
61-64 2 11 10 2 20 7 4 13 5 3 1 2
65 17 22 44 31 34 32 16 26 26 32 3 25
66-69 42 32 15 9 12 29 20 13 9 9 0 1
70 19 11 10 18 10 5 10 9 13 12 0 6
71+ 5 5 5 9 4 5 5 3 7 5 1 4
Never 2 1 1 2 2 2 6 4 1 0 0
Donrsquot know 2 3 2 5 3 2 8 9 5 5 1 13
Mean 67 65 65 65 64 65 63 64 63 64 53 59
Median 67 65 65 65 65 65 65 65 65 65 55 60
Chart 9 Younger employees feel they donrsquot have money to invest for retirement Q What is the single biggest obstacle to you saving for retirement right now
Net
herl
ands
Ger
man
y
Swed
en
Uni
ted
Kin
gdom
Fran
ce
Spai
n
Pol
and
Hun
gary
Uni
ted
Stat
es
Cana
da
Chin
a
Japa
n
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
The uncertain economic environment 19 8 13 9 13 19 11 14 12 9 29 27
Lack of money to invest 28 41 33 43 47 34 48 55 47 50 6 19
Fear of poor investment returns over the coming years 2 5 10 7 5 6 8 2 6 8 14 6
Complexity of investment products 4 4 4 3 5 3 5 2 12 5
I donrsquot know how to go about investing for the long-term 2 3 10 8 5 5 3 3 6 8 7 9
The fees charged by financial services companies 2 4 4 2 4 3 4 2 3 5 2 5
I canrsquot afford to take financial advice 3 3 6 8 2 4 3 5 3 2 3 2
I donrsquot trust the financial services industry 12 11 8 6 5 10 6 2 2 3 5 4
I donrsquot see the need to save for the long-term 6 1 2 2 3 3 3 1 2 1 4 3
Concerns about unstable currencies currency fluctuations 2 5 1 3 3 3 4 3 4 5 15 2
Other (PLEASE STATE) 3 3 1 1 3 2 4 6 2 2 1
Donrsquot know 17 12 11 7 8 6 3 6 8 6 3 17
The Young Pragmatic and Penniless Generation | 40
Chart 10 More money would incentivize young employees to save for retirement Q Which if any of the following would encourage you to save for retirement
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsMore generous tax breaks on long-term savings and pensions 20 44 30 32 27 23 42 42 33 43 40 32 products
Ger
man
yG
erm
any
Access to financial education so that I am more aware of what 24 6 14 21 16 22 21 12 23 24 43 25 I need to do for myself
Swed
enSw
eden
Access to professional financial advice so that I have personalized
Uni
ted
20 24 23 23 15 21 25 9 22 23 44 13 U
nite
drecommendations on what steps
Kin
gdom
Kin
gdom
I need to take
Simpler investment products that 12 33 19 28 20 Fr
ance
18 27 16 32 28 36 10 Fr
ance
I can understand with less jargon
Better and more frequent information about my retirement 16 28 20 27 27 23
Spai
n20 18 25 31 45 22
Spai
nsavings
Better legal protection in case I am 12 18 13 18 10 24 18 13 13 19 21 6 P
olan
dP
olan
dsold the wrong product
A pay rise 46 54 44 64 55 50 70 72 67 64 53 37
A better retirement plan pension H
unga
ryH
unga
ry27 32 25 33 29 26 42 35 39 44 33 32 match from my employer
Other 4 2 1 1 2 2 3 3 2 U
nite
d3 0
Uni
ted
Stat
esSt
ates
Donrsquot know 17 9 16 10 10 12 3 8 8 5 3 17
Not applicable - I already have 3 3 4 2 2 1 1 1 2 2 3 sufficient savings Ca
nada
Cana
da
Chin
aCh
ina
Chart 11 A majority of younger employees do not have a written plan for retirement Q Which of the following best describes your retirement planning strategy
Japa
n Ja
pan
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
I have a written plan 7 18 10 9 6 8 6 5 13 10 8 4
I have a plan but it is not written 24 47 37 25 23 31 29 31 37 44 55 24
down
I do not have a plan 61 32 51 61 62 55 62 58 45 42 34 61
Donrsquot know 7 3 3 5 8 6 3 6 4 4 3 12
41 | The Young Pragmatic and Penniless Generation
Chart 12 For young employees friends and family are the leading source of retirement savings information Q And which of these sources (of information) is most important to you
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
Bank adviser 6 11 19 5 25 5 7 4 3 17 10 2 N
ethe
rlan
dsN
ethe
rlan
dsProfessional financial adviser 12 22 10 12 10 19 19 22 21 25 19 10
Insurance agent spokesperson 3 10 2 3 1 3 6 2 3 0 3 2 G
erm
any
Ger
man
yInsurance company website 3 1 3 2 4 4 2 2 1 3 1
Personal finance websites online 8 5 7 8 5 4 10 8 12 6 10 8 retirement planning tools Sw
eden
Swed
enPersonal finance media 2 2 2 2 2 6 3 1 2 1 6 2
Government website 7 1 3 6 U
nite
d5 2 3 3 2 3 7 1
Uni
ted
Kin
gdom
Kin
gdom
Bank website 2 3 3 2 1 0 3 2 1 6 3 3
My employer 12 8 4 9 4 7 5 12 8 5 4 1 Fr
ance
Fran
ceAccountant 2 6 4 4 1 3 1 3 5 5 1 3
Lawyer 2 3 1 2 2 8 4 2 1 2 2 0 Sp
ain
Spai
nFriends and family 21 22 30 28 24 26 18 24 26 20 25 24
None of these P
olan
dP
olan
dNot applicable 21 7 16 18 19 13 17 15 14 9 5 41
Hun
gary
Hun
gary
Chart 13 Most young workers feel their employer should provide some kind of pension Q In the future what if anything should employers do to help people plan for retirement
Uni
ted
Uni
ted
Stat
esSt
ates
Cana
daCa
nada
Chin
aCh
ina
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 Ja
pan
Japa
n Employers should be required to 24 43 20 40 21 26 20 28 37 34 20 30 contribute to workersrsquo pensions
Employers should be required to make a pension available but not to 12 13 7 17 20 15 15 4 11 14 22 5 contribute into it
Employers should not be required to provide pensions but should 15 9 12 8 9 8 11 6 11 9 9 11 provide information on how to plan for retirement
Employers should provide a range of flexible benefits and 13 18 18 16 15 27 25 28 21 22 45 12 allow individuals to choose which benefits they actually want
Nothing ndash it should be left to individual employees to take care 2 2 5 1 4 3 3 5 6 5 1 9 of themselves
Nothing ndash it should be left to the government to take care of its 2 5 5 2 5 8 15 14 1 4 0 4 citizens
Donrsquot know 30 10 32 17 27 12 12 15 13 13 3 29
The Young Pragmatic and Penniless Generation | 42
Chart 14 Workplace pensions are relatively low down in young workersrsquo priorities when choosing a job Q How important to you would the following workplace benefits be if you were choosing your next job
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsBasic salary 86 93 88 91 88 92 90 94 90 93 96 94
Holiday entitlement 87 94 89 91 92 94 91 94 93 94 96 91 G
erm
any
Ger
man
yOvertime and bonus pay 86 93 87 88 89 90 89 94 90 91 97 90
Location of workplace 88 91 86 92 89 90 89 92 93 93 92 86 Sw
eden
Swed
enMedical health insurance 73 92 84 65 86 87 88 87 93 94 98 83
Opportunities for career progression 86 91 81 90 90 94 91 94 92 91 96 81 U
nite
dU
nite
dAccess to a workplace retirement 85 85 81 82
Kin
gdom
78 84 80 78 84 86 93 74 K
ingd
omplan with employer contributions
Access to good training provision 85 87 85 88 86 91 85 93 86 90 95 74 Fr
ance
Fran
ceFlexible working hours 79 87 58 86 81 89 81 87 91 91 92 57
Life insurance 72 75 79 69 80 82 Sp
ain
84 80 81 88 93 74 Sp
ain
(death in service benefits)
Phased retirement or other employer programs providing for 74 54 75 71 72 81 76 74 76 81 91 65
Pol
and
Pol
and
a transition into retirement
Ability to work past the normal 68 57 64 65 64 74 72 65 74 76 80 70 retirement age H
unga
ryH
unga
ry
Access to a workplace retirement 62 74 61 68 59 77 61 47 68 74 89 65 plan without employer contributions U
nite
dU
nite
dSt
ates
Stat
esEmployee share plans 50 72 54 65 59 73 61 51 64 73 91 55
Access to creche help with the 67 75 64 56 69 79 75 83 58 69 89 68 cost of childcare Ca
nada
Cana
da
Opportunities for foreign travel 53 54 60 55 50 71 58 66 57 61 79 37
Company car 51 46 45 47 49 63 51 49 36 49 69 Ch
ina
39 Ch
ina
Japa
n Ja
pan
Chart 15 Young workers think the state pension will need to be reformed Q With the cost of government pensions becoming a greater concern as people live longer which if any of the following do you think
the government should undertake
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
The government should reduce the overall cost of state pension 15 33 16 15 16 20 28 22 21 26 30 16 provision by reducing the value of individual pension plans
The government should increase overall funding available for the 12 21 30 22 14 34 19 26 21 18 29 10 state pension through raising taxes
43 | The Young Pragmatic and Penniless Generation
he government should take a alanced approach with some 27 26 12 30 28 23 24 16 34 31 38 41 eductions in individual payments nd some increases in tax
he government should not do nything State pension provision 7 2 12 5 3 4 3 3 5 4 0 5 ill remain perfectly affordable in he future
onrsquot know 38 19 29 29 39 20 26 34 19 21 4 28
Net
herl
ands
art 16 Products which protect against investment risk are the most important to young workers ( interested) Thinking about the types of financial products you could purchase to help provide you with security in retirement on a scale of 1 to 5
how interested are you in the following options G
erm
any
Swed
en
Uni
ted
Kin
gdom
ase 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 Fr
ance
100 100 100 100 100 100 100 100 100 100 100 100
product providing a guaranteed etirement income stream or 75 81 73 76 74 83 78 76 87 85 94 69
Spai
nifetime income in retirement
product which protects my 74 79 73 76 72 82 77 74 84 86 94 65 etirement income against inflation P
olan
d
product which guarantees that I 72 82 73 78 75 81 76 73 86 86 90 67 onrsquot lose my initial investment H
unga
ry product which helps meet the ost of long-term care if I become 74 79 74 77 70 79 76 71 86 85 84 66
Uni
ted
nable to look after myself St
ates
product which protects my capital 71 81 71 76 68 76 77 73 84 83 93 65 rom poor investment returns Ca
nada
product which generates a etirement income and allows 69 78 71 75 68 81 77 72 84 86 94 70 e to take a lump sum from the
Chin
anvestment should I need to
product where the annual 66 78 68 75 72 79 77 70 85 86 87 64 anagement charges are kept low Ja
pan
product which enables me to eep some control over how my 71 73 70 75 72 80 75 69 88 85 91 63 avings are invested during my etirement
product which manages the sset allocation so that I am never 68 70 67 73 66 76 71 67 80 83 95 60 xposed to a level of risk Irsquom not omfortable with
product which continues to rovide a retirement income to my 74 78 71 75 73 81 79 73 86 82 94 60 pouse in the event that I die first
product which protects my family gainst having to pay estate taxes 73 76 71 74 75 81 75 69 82 82 89 56 hen I die
product which locks in investment 72 71 63 73 64 71 59 56 81 84 89 61 eturns during the good years
Tbra
Tawt
D
ChQ
B
Arl
Ar
Ad
Acu
Af
Armi
Am
Aksr
Aaec
Aps
Aaw
Ar
The Young Pragmatic and Penniless Generation | 44
Chart 8 Younger people are more likely not to be using any means of retirement savings Q Which financial means if any are you currently using to prepare for your retirement
33 Savings accounts 31
36 Government pension social security 24
25 Defined benefit plan 21
22 Private pension 17
23 Defined contribution plan 15
20 Life insurance 15
14 Stocks 10
14 My home 9
12 Mutual funds 8
9 Inheritance 7
9 Bonds 7
8 Investment property 7
5 Employee stock purchase 5
5 Investment insurances (annuities) 4
4 Long-term care insurance 4
6 Annuities 3
My business 2 3
Reverse mortgage 1 1
Other 3 2
12 None nothing 17
6 Donrsquot know 10
All 20 to 29 year olds
Leisure
Freedom
Far away
Insecurity
Enjoyment
Poverty
Ill health
Boredom
Opportunity
Dependent on others
Loneliness
Tired
Excitement
None of the above
Donrsquot know
Retirement associations What does the younger generation feel about retirement and want to get out of it Perhaps unsurprisingly 20-29 year olds are more
likely to be negative than older respondents associating retirement with boredom loneliness and ill health They are also far more
likely to believe retirement is lsquofar awayrsquo which is likely to be a barrier to retirement saving
15 | The Young Pragmatic and Penniless Generation
Chart 9 The younger generation has more negative associations with retirement Q Which if any of the following words do you most associate with retirement
44 Leisure 39
36 Freedom 30
17 Far away 26
25 Insecurity 25
25 Enjoyment 21
19 Poverty 19
15 Ill health 17
9 Boredom
13
16 Opportunity
13
10 Dependent on others
12
9 Loneliness
11
0
r olds
7Tired
1
6Excitement
6
2None of the above
1
2Donrsquot know 2
All 20 to 29 yea
Aspirations and responsibilities for retirement Income levels in retirement ung people have similar retirement aspirations to the general A high proportion (47) do not know if they are on course
pulation for example travel (63) spending time with to achieve their retirement income goal Combined with the
iends and family (61) and pursuing new hobbies (52) high level of financial responsibility young employees expect
r them however retirement also includes the responsibility of to assume in retirement it is clear that people not only need
ring for others Two-fifths (40) believe that lsquoadult children to build much greater awareness of what kind of financial
retirees should help through providing financial support to pressures they are likely to face in retirement but also require
eir parents if neededrsquo and 28 believe that this will affect greater support in establishing realistic retirement income
em directly in retirement through providing financial support targets which are capable of meeting their needs
their parents A fifth (21) also expect to spend some of
eir retirement caring for other family members while just
donrsquot expect to provide for anyone compared to 40 of all
ployees Clearly todayrsquos young employees anticipate serious
ancial responsibilities in their retirement
Yo
po
fr
Fo
ca
of
th
th
to
th
30
em
fin
The Young Pragmatic and Penniless Generation | 16
Chart 10 Many young employees do not think that they are on course to achieve target retirement income Q Do you think you will achieve this income [your estimated income needed in retirement]
Base 20-29 year olds
Yes I am on course to achieve my retirement
income
16
47
12
16
10
I donrsquot know if I am on course to achieve my
retirement income
No I am on course to achieve around
one-quarter (25) of
No I am on course to achieve around half of my
retirement income
No I am on course to achieve around
three-quarters (75) of my retirement income
532
China
586
Japan
United S
tate
s
628
Poland
635
Canad
a
636
Hunga
r
638
y
Fran
ce
645 647
Spain
Sweden
649
United K
ingdom
651
Germ
any
653
Nether
lands
666
my retirement income
When will young people retire Media reports about the need to raise the age of retirement appear to have influenced younger employees Fully 44 of 20-29 year
olds do not expect to be able to choose their retirement date although the younger generation do expect to retire at a similar age
to older employees 63 This varies considerable by country In the Netherlands young employees expect to retire eight years later
than those in Japan Some countries such as China and Japan have surprisingly low expected retirement ages suggesting that young
employees may benefit from having a better understanding of when government or workplace retirement benefits kick in
Chart 11 Young people in most countries expect to retire before 65 Q At what age do you expect to retire from all paid employment
Base 20-29 year olds
Despite expecting to retire at the same age as their parents younger employees are more open to a transition into retirement
reflecting their more flexible outlook toward work Around half (51) are happy to change the way they work in some way as they move
into retirement Just 8 expect to keep working as they do currently
17 | The Young Pragmatic and Penniless Generation
Part 3 What is holding young employees back Insights into what young employees feel is holding them back from saving or saving more can be used to encourage younger people to adopt more positive savings behaviors This chapter explores the attitudes of young employees toward the financial obstacles they face and asks what actions they have taken in preparation for retirement The findings reveal that while the majority lacks adequate planning for their retirement needs financial shortcomings are only part of the stor y Spending preferences play a key role in the savings gap of advanced economies
The Young Pragmatic and Penniless Generation | 18
Lack of money to invest 37
16 The uncertain economic environment
7 Fear of poor investment returns over the coming years
6 I donrsquot trust the financial services industry
6 I donrsquot know how to go about investing for the long-term
4 oncerns about unstable currencies currency fluctuations
4 Complexity of investment products
4 I canrsquot afford to take financial advice
3 The fees charged by financial services companies
3 I donrsquot see the need to save for the long-term
Other 2
Donrsquot know 8
A pay rise
More generous tax breaks on long-term savings and pensions products
A better retirement plan pension match from my employer
Better and more frequent information about my retirement savings
Simpler investment products that I can understand with less jargon
Access to professional financial advice so that I have personalized recommendations on what steps I need to take
Access to financial education so that I am more aware of what I need to do for myself
Better legal protection in case I am sold the wrong product
Other
Not applicable - I already have sufficient savings
Donrsquot know
Obstacles and incentives to saving
Chart 12 Younger employees feel they donrsquot have money to invest for retirement Q What is the single biggest obstacle to you saving for retirement right now
Base 20-29 year olds
C
What is the single biggest obstacle preventing twentysomethings that they rank pressing and desirable life goals such as marriage
m saving for retirement Not having enough money to invest starting a family vacations and other leisure activities above the
top of the list cited by over a third (37) although this figure need to plan for retirement This suggests the savings gap is
ops to just 6 in the emerging market of China where mean preference-driven
omes are the lowest by far ($18000) suggesting that lack of
sh may be partly a state of mind Young employees in China The biggest obstacle to retirement savings cited by one-eighth
actually more worried about local concerns such as economic (13) of respondents is either not knowing how to invest for the
certainty (29) and currency instability (15) Behavioral long-term or the complexity of investment products charges and
ance has an impact too with the way young employees frame fees Ready solutions to this include improving young employeesrsquo
eir financial priorities creating its own obstacles to saving financial literacy about retirement planning and creating easier
many as 57 of 20-29 year olds believe that saving for access to professional financial advice
tirement is important but not a current priority suggesting
fro
is
dr
inc
ca
are
un
fin
th
As
re
19 | The Young Pragmatic and Penniless Generation
Chart 13 More money would incentivize young employees to save for retirement Q Which if any of the following would encourage you to save for retirement
Base 20-29 year olds
57 A pay rise
More generous tax breaks on long-term savings and pensions products
34
A better retirement plan pension match from my employer
33
Better and more frequent information about my retirement savings 26
Simpler investment products that I can understand with less jargon 24
Access to professional financial advice so that I have personalized recommendations on what steps I need to take 23
Access to financial education so that I am more aware of what I need to do for myself 22
Better legal protection in case I am sold the wrong product 16
Other 2
Not applicable - I already have sufficient savings 2
Donrsquot know 10
Chart 14 Very few younger employees have a written plan for retirement Q Which of the following best describes your retirement planning strategy
Base 20-29 year olds
5 Donrsquot know I have a
written plan
8
34 I have a plan but it is not
52 written down
I do not have a plan
Turning to incentives greater remuneration predictably tops a list Retirement planning of what would encourage 20-29 year olds to save for retirement Retirement planning is essential to adequate retirement saving
More tellingly a third (33) would like their employer to provide although it is somewhat lacking in todayrsquos younger employees
a better retirement plan into which both parties contribute Over half (52) have no retirement planning strategy at all
Better information and simple products would also help more and only 8 have noted down their retirement strategy
people to save A quarter (26) would be encouraged to save by
better and more frequent information about retirement savings Nevertheless the respondents polled believe that the current
while a similar number (24) want simple investment products global economy makes retirement planning increasingly
that are easy to understand As with the previous question a important ndash 71 agreed with this statement It is clear from this
lack of investment knowledge and the complexity of investment that young people between the ages of 20 and 29 do not lack
products are revealed as obstacles to savings the will to save they lack the opportunity
The Young Pragmatic and Penniless Generation | 20
Part 4 Creating the right conditions for young employees to save How may young employeesrsquo obstacles to saving be overcome For retirement readiness this will be a defining question of the early twenty-first centur y ndash and an extremely challenging one given the number of serious issues affecting younger employeesrsquo finances What was learned in the previous chapter about encouraging young employees to save is a start This chapter examines which areas and triggers to saving can be unlocked and whether government employer or individual should take most responsibility
21 | The Young Pragmatic and Penniless Generation
Friends and family
Professional financial adviser
17
24
Bank adviser 9
Personal finance websites online retirement planning tools
My employer
Government website
4
8
7
Insurance agent spokesperson
Accountant
3
3
Personal finance media 3
Lawyer
Bank website
3
2
Insurance company website
Donrsquot know
2
15
Information and advice on retirement saving strong theme revealed by our findings is that younger This finding is remarkably consistent across the countries
mployees want more information on savings products and sur veyed despite significant differences in market makeup
etter access to advice The largest share 24 (compared although some differences exist For instance a quar ter
o 17 for all employees) finds friends and family to be the (25) of young employees in France turn to bank advisers
ost important source of advice followed by professional for financial information nearly triple the number among all
dvisers (17) and bank advisers (9) That young employees young people (9)
urn to friends and family first suggests an unmet need for
rofessional financial advice This is both a challenge and an
pportunity for the financial ser vices sector
hart 15 For young employees friends and family are the leading source of retirement savings information Which of these sources (of information) is most important to you
ase 20-29 year olds
A
e
b
t
m
a
t
p
o
CQ
B
What is the role of the workplace in retirement planning Does this influence what retirement benefits younger
In response to shifting employment patterns todayrsquos younger employees expect from their workplace Certainly a majority
employees are less loyal to their employers than older workers favor workplace retirement plans with 61 believing that these
Fully 39 of 20-29 year olds are planning to look for a new job should be a fundamental part of pay (although this is lower
in the next 12 months compared to 29 of all workers and than for employees overall) and just 4 feel that retirement
31 frequently think about quitting their jobs Strikingly while planning should be left entirely to individuals
53 of all workers plan to stay with their current employer
until retirement just 37 of 20-29 year olds say this However there is evidence of a slight shift in perceptions
Younger workers are less likely to want workplace retirement
Doubtless much of this is because younger workers are more plans over other factors Of those who want employer
mobile and have more opportunities Another trigger to lower retirement plan contributions only 46 wanted this even if
employer loyalty may be the expectation of holding more jobs it reduced benefits and 35 (compared to 43 of all workers)
and even pursuing multiple careers over a working lifetime if it cut jobs
The Young Pragmatic and Penniless Generation | 22
Donrsquot know Employers should be
required to contribute to workersrsquo pensions
5 Nothing ndash it should be left to the government to take 18
care of its citizens 28
4 Nothing ndash it should be left to individual employees to
take care of themselves
13
22
Employers should provide a range of flexible benefits
and allow individuals to choose which benefits they
actually want
10 Employers should
be required to make a pension available but not
to contribute into it
Employers should not be required to provide pensions but should
provide information on how to plan for retirement
Chart 16 Most young workers feel that their employer should provide some kind of pension Q In the future what if anything should employers do to help people plan for retirement
Base 20-29 year olds
Are other workplace benefits more important Younger workers were asked to rate the importance of various workplace benefits The results reveal how highly they value the
elements of their compensation package Chart 17 shows that 87 of young employees believe a workplace retirement plan with
employer contributions would be an important factor when choosing their next job While retirement may be decades away for
twentysomethings 80 believe programs provide for a phased retirement are important
23 | The Young Pragmatic and Penniless Generation
Basic salary 94
93 Holiday entitlement
91 Overtime and bonus pay
91 Location of workplace
88 Medical health insurance
87 Opportunities for career progression
Access to a workplace retirement plan with employer contributions 87
Access to good training provision 86
Flexible working hours 85
Life insurance (death in service benefits) 81
Phased retirement or other employer programs providing for a transition into retirement 80
Ability to work past the normal retirement age 70
Access to a workplace retirement plan without employer contributions
67
Employee stock plans 65
Access to creche help with the cost of childcare 59
Opportunities for foreign travel 50
Company car 43
Chart 17 Workplace retirement plans are a relatively low priority for younger workers when choosing a job How important to you would the following workplace benefits be if you were choosing your next job
ase 20-29 year olds
Q
B
Regarding workplace benefits provided by employers today considered just enough to fulfill basic needs and in China a
young employees are about as likely as all workers to be offered fully formed nationwide retirement system is still some way off
retirement tools such as annual plan statements and online The future shape and affordability of these plans is debated in
tools from their employer though it is concerning that 24 do all of the sur vey countries to var ying degrees
not know if such tools are available or not Those provided are
considered helpful Younger workersrsquo views on reform are important because
changes to government retirement benefits are more likely
The role of government to affect them than any other part of the working population
The generosity of government retirement benefits varies The main concern cited by 57 is of facing less generous
considerably in the countries sur veyed In some countries such government retirement benefits than those enjoyed by their
as France government benefits are the primar y mechanism parentsrsquo generation
for funding retirement while in the United Kingdom they are
The Young Pragmatic and Penniless Generation | 24
The government should reduce the overall cost of state pension provision by
reducing the value of Donrsquot know individual pension plans
25 22
4 The government should not do anything State pension provision will
remain perfectly affordable in the future
28
21 The government should increase overall funding
available for the state pension through
raising taxes
The government should take a balanced approach with some reductions in individual payments and
some increases in tax
Chart 18 Young workers think that the government retirement system will need to be reformed Q With the cost of government retirement benefits becoming a greater concern as people live longer which
if any of the following do you think the government should undertake
Base 20-29 year olds
The younger generation believes that the government cannot What do young employees look for in a retirement product continue to provide as it does now ndash just 4 think government The sur vey findings show that young employees have
benefits will remain affordable to society However there is no reser vations about employer and government retirement
consensus on what governments should do to reform retirement benefits So what then do they want from a private savings
plan systems Over a fifth (22) think retirement entitlements product The savings product feature most valued by younger
should be cut just over a fifth (21) think governments should workers is protection against investment risk (Char t 19)
raise taxes and more than a quarter (28) think a mixture of This may be in the form of no loss of initial investment a
the two is the best solution Another quarter admits that they guaranteed income stream or protection against inflation
donrsquot know what should be done This is reasonable ndash the initial investment of those farthest
from retirement is most at risk However less consideration
is given to savings grow th through investment returns This
suggests that there is an oppor tunity to educate young
workers about the trade-off between returns and risk
management and what they stand to gain
25 | The Young Pragmatic and Penniless Generation
Chart 19 Products which protect against investment risk are the most important to young workers ( interested) Q Thinking about the types of financial products you could purchase to help provide you with security in retirement on a scale of 1 to 5
how interested are you in the following options
Base 20-29 year olds
A product providing a guaranteed retirement income stream or lifetime income in retirement 82
A product which protects my retirement income against inflation 81
A product which guarantees that I donrsquot lose my initial investment 81
A product which helps meet the cost of long-term care if I become unable to look after myself 80
A product which protects my capital from poor investment returns 79
A product which generates a retirement income and allows me to take a lump sum from the investment should I need to 79
A product where the annual management charges are kept low 78
A product which enables me to keep some control over how my savings are invested during my retirement 77
A product which manages the asset allocation so that I am never exposed to a level of risk Irsquom not comfortable with 76
A product which continues to provide a retirement income to my spouse in the event that I die first 75
A product which protects my family against having to pay estate taxes when I die 72
A product which locks in investment returns during the good years 70
The lsquodefined ambitionrsquo retirement system in This removes some of the disadvantages of leaving
the Netherlands a sustainable retirement solution retirement liabilities exclusively up to employers
for young workers (defined benefit) or employees (defined contribution)
In the Netherlands as elsewhere young workers are faced In the Netherlands this is likely to involve legislation which
with an increasing retirement age decreasing government lets retirement funds automatically adjust pay-outs and
suppor t for retirement and declining traditional defined retirement age as life expectancy changes xii
benefit employer retirement plans Reforms proposed
by the Dutch may show a way for ward for all mature and This model has garnered interest elsewhere In the
aging economies United Kingdom Pensions Minister Steve Webb expressed
interest on a more limited scale with a government
rsquoDefined ambitionrsquo proposes that risks are not taken on fully guarantee for a minimum rate of return for defined
by either employer or employee but are shared contribution retirement plans
The Young Pragmatic and Penniless Generation | 26
Recommendations Enabling young workers to save The studyrsquos findings reveal that the majority of young workers (66) are either saving consistently or aspire to start saving but face challenges including debt low pay and funding for significant life events and generational changes to the economic landscape and government and employer support If young people are to achieve a prosperous retirement their willingness to save should be met with better opportunities to save Here is what can be done by employers governments and young people themselves to address retirement planning concerns for younger adults
27 | The Young Pragmatic and Penniless Generation
Individuals Employers and governments
Determine how much income you need in retirement Auto-enroll employees into a workplace retirement plan Young people accept the need to save for retirement but donrsquot If an auto-enrollment workplace retirement plan is feasible
know how to act on that need They can become more retirement this can play a major role in getting young workers saving early
savvy simply by talking to friends and family (as do 24 of and regularly Combined with auto-escalation (the automatic
our respondents already) or employers going online to use annual increase in retirement plan contributions) and matching
retirement calculators or reading the personal finance media contributions it can lead to greater retirement readiness
Seek out a financial advisor Provide more flexible savings products through the workplace Young people are faced with life events that make it easy to Not all savings journeys start with a retirement plan particularly
feel overwhelmed by financial priorities in addition to retirement for young people who may think of retirement as lsquotoo far awayrsquo
planning Soliciting advice from a finance professional early in Employers can kick-start the savings habit in younger workers
life (17 of young employees have done so already) helps with by providing flexible easy to access and easy to understand
planning and priorities and making sense of long-term finances savings plans as a more attractive starter option
Start saving now and save consistently Make company retirement plans more portable As with all employees young people will strengthen their Young people move jobs much more often than previous
retirement readiness simply by saving regularly Today only 25 generations of employees so savings like DC retirement plans
of young people always save yet even small regular amounts need to follow employees when they change jobs
will improve retirement readiness over time
Make tax incentives more effective Ask your employer about workplace retirement savings plans All countries encourage long-term savings through tax relief but
and other retirement benefits young people often arenrsquot aware of this or donrsquot understand it
While one third (33) of young people believe that a workplace A more targeted system of tax relief could help provide clearer
retirement savings plan provides a major opportunity to start and simpler signals to younger people about the financial
saving employers often experience difficulties in engaging benefits of long-term saving
younger employees in discussions about retirement planning
The workplace is an important channel for achieving retirement Make better financial education central to the workplace readiness so be sure to max out on any employer contributions retirement offer
Young people who aspire to save may be prevented from
doing so by setting the wrong financial priorities Workplace
retirement education ndash alongside professional advice ndash can help
guide young people toward the right long-term priorities at an
earlier age in life
The Young Pragmatic and Penniless Generation | 28
29 | The Young Pragmatic and Penniless Generation
Glossary
Aegon Retirement Readiness Index (ARRI) c areer average retirement plan The ARRI assesses the relative levels of retirement A type of defined benefit plan that is based on an
preparedness of employees across different countries on a employeersquos average retirement earnings over the duration
scale from 1 to 10 The Index is based on three questions of plan membership Same as average salary plan
covering attitudes and three questions covering behaviors
defined ambition (DA) plan average salary plan A type of retirement plan in which retirement plan risks
A type of defined benefit plan that is based on an are shared between the employer and the employee
employeersquos average retirement earnings over the duration It offers greater certainty to savers around the final value
of plan membership Same as career average plan of their retirement assets than in DC plans and less
cost volatility for employers than with DB plans In the
a nnuity Netherlands Defined Ambition (DA) retirement plans are
A form of contract sold by life insurance companies that being introduced in order to help relieve the pressure on
guarantees a fixed or variable payment to the annuitant employers while still trying to provide employees with a
at some future time usually retirement All capital in the more secure retirement plan The United Kingdom too is
annuity grows tax-deferred looking at DA retirement plans as a solution
auto enrollment defined benefit (DB) plan An employer-sponsored retirement plan in which the An employer-sponsored retirement plan where the amount
employer is able to enroll an employee without that of future benefits an employee will receive from the plan is
employeersquos express authorization The employer determines defined typically by a formula based on salary history and
what percentage of the employeersquos salary or wages is years of service The amount of contributions the employer
contributed to the plan The employee is able to change is required to make will depend on the investment returns
this percentage and can opt out of enrollment in the plan experienced by the plan and the benefits promised
Contrast defined contribution plan
a uto-escalation A feature of a plan which automatically increases the defined contribution (DC) plan percentage of (retirement) funds saved from salary An employer-sponsored retirement plan such as a 401(k)
This feature generally uses a default or standard plan or a 403(b) plan in the United States in which
contribution escalation rate contributions are made to individual participant accounts
Depending on the type of DC plan contributions may be
B aby Boomers made by the employee the employer or both
A term used to refer to people generally born between
the end of World War II in 1945 and the mid 1960s The employeersquos benefits at retirement or termination of
Other generations Silent Generation - the generation born employment are based on the employee and employer
between 1925 and 1945 Generation X - the generation contributions and earnings and losses on those
born between 1965 and 1979 Millennials or Generation contributions See also 401(k) and 403(b) plan
Y - the generation born between 1980 and 2000 and often Contrast defined benefit plan
classified as the children of Baby Boomers
The Young Pragmatic and Penniless Generation | 30
401(k) plan An employer sponsored retirement plan that enables
employees to make tax-deferred contributions from their
salaries to the plan
403(b) plan An employer-sponsored defined contribution plan that
enables employees of universities public schools and
non-profit organizations to make tax-deferred contributions
from their salaries to the plan
final salary plan A type of defined benefit plan in which retirement
benefits are based on final retirement salary in the years
immediately before retirement benefits are received
Millennials A term used to refer to the people born from about 1980
to 2000 brought up using digital technology They are
often classified as the children of Baby Boomers
r etirement (or pension) plan Provides replacement for salary when a person is no
longer working due to retirement In the case of a defined
benefit retirement plan the employer or union contributes
to the plan which pays a predetermined benefit for the
rest of the employeersquos life based on length of service and
salary Payments may be made either directly or through
an annuity Retirement plan payments are taxable income
to recipients in the year received The employer or union
has fiduciary responsibility to invest the retirement plan
funds in stocks bonds real estate and other assets earn
a satisfactory rate of return and make payments to retired
workers Retirement plan funds holding trillions of dollars
are one of the largest investment forces in the stock
bond and real estate markets If the employer defaults in
the United States retirement plan payments are usually
guaranteed by the Pension Benefit Guaranty Corporation
(PBGC)
variable annuities (VA) An insurance contract in which the insurance company
guarantees a minimum payment at the end of the
accumulation period The payments may vary depending
on the financial performance of the managed portfolio
31 | The Young Pragmatic and Penniless Generation
About Aegon Transamerica Center for Retirement Studiesreg and Cicero Consulting
Aegon Transamerica Center Aegon is an international life insurance pensions and asset reg management company with businesses in over 20 markets for Retirement Studies in the Americas Europe and Asia Aegon companies employ The Transamerica Center for Retirement Studiesreg (TCRS) is
around 24000 people and serve millions of customers a division of the Transamerica Institute a nonprofit private
worldwide foundation TCRS is dedicated to educating the public on
wwwaegoncom emerging trends surrounding retirement security in the
United States TCRSrsquo research emphasizes employer-sponsored
In 2010 Aegon became a founding member of the Global retirement plans issues faced by small to mid-sized companies
Coalition on Aging which seeks to raise awareness of aging and their employees and the implications of legislative and
issues among policymakers and the general public A major aim regulatory changes Transamerica Institute is funded by
of the coalition is to transform the way we think and speak contributions from Transamerica Life Insurance Company and
about aging replacing the familiar rhetoric of lsquoproblemsrsquo with its affiliates and may receive funds from unaffiliated third-
a more positive discussion of lsquopossibilitiesrsquo and lsquoopportunitiesrsquo parties For more information about TCRS please refer to
wwwglobalcoalitiononagingcom wwwtransamericacenterorg
Cicero Consulting A leading consultancy firm serving the banking insurance and
asset management sector Cicero specializes in public policy
and communications consulting as well as global thought
leadership and independent market research Cicero was
established in 2001 and now operates from offices in London
Brussels Washington and Singapore As a market leader in
pensions and retirement research Cicero designed
and analyzed the research and contributed to the report
wwwcicero-groupcom
The Young Pragmatic and Penniless Generation | 32
Marta acebo Mark Green Patricia Plas
Paula alvarez douGlas henck scott roane
Frits bart wendel hoFMan thurstan robinson
Grace basile
lynette belFry
andrew berwick
Frans van der horst
tatsuo kai
herMan kaPPelle
Patti rowey
sarah russell
Joost van schaGen
robin boon Gaacutebor kePecs dick schiethart
bert-JaaP brons Marco keiM erik schouten
douG brooks
libby buet
kent callahan
JaiMe kirkPatrick
bas knol
roGer koch
anGela seyMour Jackson
kate sMith
renske stoker
Jeanne de cervens
dana chen
Peter kunkel
alexander kuiPers
eyleen sun
MartiJn tans
arkadiusz chMurzynski
heidi cho
brian lewis
Mike linder
GreG tucker
Mark twiGG
siMon clow siMon luke catherine wanG
robert colliGnon Jason Ma Marc van weede
catherine collinson GrzeGorz Mathea tiM willaert
wendy daniels
Michel denizot
edit drevenka
Paul Middleton
takaoh MiyaGawa
david Moulton
daniel wriGht
alex wynaendts
MacieJ zaPala
Jan driessen
kelly Fu
adrian Grace
Mark Mullin
Marcelle noltenius
stiG nybo
Peacuteter zatykoacute
vicky zeldin
Disclaimer This repor t contains general information only and does
not constitute a solicitation or offer No rights can be
derived from this repor t Aegon its par tners and any of
their affiliates or employees do not guarantee warrant
or represent the accuracy or completeness of the
information contained in the repor t
Acknowledgements
33 | The Young Pragmatic and Penniless Generation
References and notes i For a comparison of different retirement systems see lsquoPensions at a Glance 2011rsquo OECD 2011 ii As the survey was carried out online the survey results in China are based toward people living in urban areas iii ldquoPensions Marketsrdquo TheCityUK March 2013 p9 iv Global Employment Trends for Youth 2013 A generation at risk International Labour Organisation 2013 p2 v Eurostat July 2013 vi OECD Employment and Labour Markets Key Tables from OECD No 2 2012 vii The Federal Reserve Bank of New York 2012 Quarterly Report on Household Debt March 29 2013 viii World Bank ix lsquoWorld-class povertyrsquo The Economist February 27 2013
httpwwweconomistcomblogsanalects201302chinas-poor x lsquoThe Chinese slow down in char tsrsquo The Economist July 15 2013 xi lsquoChina rsquos welfare system difficult inflexible and blatantly unfairrsquo The Guardian April 23 2013
httpwwwtheguardiancomglobal-development2013apr23china-welfare-system-inflexible-unfair xii lsquo The Dutch experience with Defined Ambition pensions and the impact on companiesrsquo Aegon Global Pensions March 12 2013
httpwwwaegonglobalpensionscomenHomePublicationsNews-archiveNewsThe-Dutch-experience-with-Defined
Ambition-pensions-and-what-that-may-mean-for-companies-in-the-Netherlands-and-the-UK
shy
The Young Pragmatic and Penniless Generation | 34
Contact information HE ADQUARTER S
Aegon NV
PO Box 85
2501 CB The Hague
Telephone +31 70 344 32 10
w w waegoncom
MEDIA REL ATIONS
Telephone +31 70 344 89 56
Email gcc-iraegoncom
Countr y Index score
Germany 548
China 541
Canada 524
United States 519
The Netherlands 488
United Kingdom 486
Sweden 483
France 475
Hungar y 473
Poland 463
Spain 440
Japan 430
Total 489
Appendix 1 Aegon Retirement Readiness Index (ARRI) - technical note
Aegon Retirement Readiness Index (ARRI)-technical note 2013 Weightings (2012 in brackets) A sample of 12000 pre and post retirees was drawn from 1 Personal responsibilit y 20 (30)
twelve countries Of these 10800 (90) were pre-retirees 2 Level of awareness 30 (35)
and these were chosen for fur ther analysis of their plans 3 Financial capability Understanding 30 (25)
for retirement The Index that was developed forms an 4 Retirement planning 50 (50)
assessment of how well an individual perceives the adequacy 5 Financial preparedness 60 (60)
of his her own finances and financial awareness specifically 6 Income replacement 35 (35)
for addressing his retirement needs
Note that the weights devised to show the relative
The lsquotargetrsquo for the Index impor tance of each question in calculating the Index add to
The question on current savings activity was designated as the 225 These were then re-scaled so that a final scale of 1 to
target question (dependent variable) for predicting the level of 10 was calculated
preparedness for retirement Responses to this question were
then correlated with each of the six key questions (variables) Final scores by country below to understand which were driving the activity These weightings were multiplied by the actual scores for each
This was done because it was not felt to be correct to give respondent for each of the six Index questions and aggregated
each of the six variables described below an equal weight as to obtain a provisional score This was then adjusted to
they appeared to have quite different relationships to the give countr y scores out of 1 to 10 (A score of 1 to 10 had
target question sufficient differentiation to be used as the scale for analysis)
1 Personal responsibilit y for income in retirement
2 Level of awareness of need to plan for retirement
3 F inancial capability Understanding of financial matters
regarding plans for retirement
4 Retirement planning Level of development of plans
5 Financial preparedness for retirement
6 Income replacement Level of projected income replacement
The weighting To estimate the statistical significance of the decline in overall
scores in this yearrsquos Index is theoretically incalculable
Two things have changed from 2012 to 2013
1 C anada and China have joined the sample
2 The new countries have thus influenced the weights of
emphasis placed on the 6 variables used to calculate
the score hence the weights attached to the complex
calculation have changed
However it is noticeable that for countries which were sampled
in both time periods the mean scores for the six individual
variables have almost invariably declined and on average more
than half of them have shown a significant level of decline
In particular the question lsquoDo you think you will achieve this
incomersquo has for all countries shown a significant level of
decline We thus hypothesize that the comparative results
show a significant decline
The Young Pragmatic and Penniless Generation | 36
Net
herl
ands
Net
herl
ands
Net
herl
ands
Ger
man
yG
erm
any
Ger
man
yBase 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
Better off 7 4 23 Sw
eden
Swed
en11 5 7 8 3 11 14 50 5
Swed
en
About the same 19 18 27 23 8 19 18 13 29 29 24 21 U
ntie
dU
ntie
dU
nite
d Worse off 66 74 41 58 79 69 71 76 51 47 21 55
Kin
gdom
Kin
gdom
Kin
gdom
Donrsquot know 9 3 9 9 9 4 4 8 9 10 6 19
Fran
ceFr
ance
Fran
ce
Chart 2 Education of 20 ndash 29 year olds by country Q Please choose from the following list the highest level of educational or professional qualification you have
Spai
nSp
ain
Spa
in
Pol
and
Pol
and
Pol
and
Hun
gary
Hun
gary
Hun
gar y
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
dU
nite
d 100 100 100 100 100 100 100 100 100
Stat
es100 100 100
Stat
esSt
ates
Less than high school graduate 2 44 6 14 1 3 2 7 1 3 Ca
nada
Cana
daC
anad
aHigh school graduate 11 33 53 23 22 22 4 41 14 21 1 2
Some college or trade school 46 2 9 9 9 19 37 14 28 20 4 33 Ch
ina
Chin
aC
hina
College degree University degree 31 15 27 30 41 43 21 33 50 46 9 57
Postgraduate degree or 8 3 3 23 25 11 36 1 8 9 80 6 qualification Ja
pan
Japa
n Ja
pan
Other 2 4 1 1 1 2 0 5 0 6 2
None 0 1 1 0 1 0 0
NET Less than undergrad degree 61 82 70 47 34 46 43 66 42 45 11 37
NET Undergrad degree or higher 39 18 30 53 66 54 57 34 58 55 89 63
Chart 3 Aegon Retirement Readiness Index scores for young employees by country
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
NET Low Index (0-5) 80 64 79 81 85 78 81 73 65 61 61 87
NET Medium Index (6-7) 15 30 18 15 14 21 17 23 25 31 31 12
NET High Index (8-10) 4 6 3 3 1 2 2 4 10 8 7 1
Appendix 2 Country comparisons Chart 1 The majority of young employees believe that they will be worse off in retirement compared to their parents Q Do you think that future generations of retirees will be better off or worse off than those currently in retirement
37 | The Young Pragmatic and Penniless Generation
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsI always make sure that 27 34 27 26 17 14 19 22 35 33 32 20 I am saving for retirement
I only save for retirement G
erm
any
Ger
man
y21 27 20 13 17 21 16 6 17 24 20 24 occasionally from time to time
I am not saving for retirement now 6 11 8 11 5 15 9 4 10 8 9 5 although I have in the past Sw
eden
Swed
en
I am not saving for retirement 35 23 34 46 53 40 49 54 36 33 38 46 though I do intend to U
nite
dU
ntie
dK
ingd
omK
ingd
om I have never saved for retirement and 11 6 10 5 8 10 6 13 3 2 1 6 donrsquot intend to
Fran
ceFr
ance
Chart 5 Younger people are more likely not to be using any means of retirement savings Sp
ain
Spai
nQ Which financial means if any are you currently using to prepare for your retirement
Pol
and
Pol
and
only asked in Germany only asked in Spain
Hun
gary
Hun
gary
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
dSt
ates
Stat
es100 100 100 100 100 100 100 100 100 100 100 100
Defined benefit plan 16 10 25 29 15 3 76 11 20 13 5 Ca
nada
Cana
daDefined contribution plan 28 10 17 19 19 14 10 23 40 7 3
Private pension 8 18 14 10 5 9 4 13 12 40 66 4 Ch
ina
Chin
a Government pension social security 12 43 14 21 8 7 4 18 27 33 71 35
Stocks 5 12 14 7 4 17 7 2 13 10 23 9
Bonds 1 8 5 6 2 16 4 2 8 13 14 3 Ja
pan
Japa
n
Mutual funds 2 14 23 4 2 10 3 4 7 16 9 6
Investment insurances (annuities) 2 3 2 3 2 9 4 5 2 4 6 1
Savings accounts 23 37 38 25 23 6 29 15 36 37 65 36
Investment property 2 10 6 7 9 2 5 2 5 11 18 1
Employee stock purchase 1 1 1 4 1 29 0 4 1 7 1
My home 10 5 8 7 7 8 4 6 6 14 30 1
Reverse mortgage 1 4 2 4
My business 2 1 3 2 2 4 1 1 2 4 12 1
Inheritance 3 11 7 11 7 9 9 8 7 9 6 2
Annuities 1 15 2 2 1 4 3 2 1 2 8
Long-term care insurance 2 1 3 2 9 5 1 6 4 7 1
Life insurance 6 11 8 8 14 3 18 15 19 18 36 17
Unterstuumltzungskasse aus 2 Eigenmitteln finanziert
Unterstuumltzungskasse vom 2 Arbeitgeber finanziert
Chart 4 Younger employees are much more likely to aspire to save for retirement Which of the following best explains your approach to saving for retirement This can include money you contribute to any long-term
investment including pensions stocks and shares investment-linked insurances property etc
Q
The Young Pragmatic and Penniless Generation | 38
Plan de empleo mixto 2 (combinacioacuten de las dos anteriores)
Other 1 6 4 0 1 2 2 3 2 2 3 3
None nothing 8 14 12 23 25 31 6 27 21 17 3 24
Donrsquot know 29 6 17 13 19 8 4 9 7 7 0 9
hart 6 The younger generation has more negative associations of retirement Which if any of the following words do you most associate with retirement
Net
herl
ands
Net
herl
ands
Ger
man
yG
erm
any
Swed
enSw
eden
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
d100 100 100 100 100 100 100 100 100 100 100 100
Kin
gdom
Kin
gdom
Freedom 35 32 36 39 19 26 11 20 35 40 37 33
Opportunity 7 27 25 18 4 8 9 10 17 16 9 16 Fr
ance
Fran
ceLeisure 58 48 36 41 23 24 43 32 50 50 55 6
Excitement 2 5 3 8 2 6 1 2 17 17 4 3 Sp
ain
Spai
nPoverty 11 26 23 11 26 14 37 44 7 5 6 20
Insecurity 34 24 18 16 20 18 35 56 10 9 18 44 P
olan
dP
olan
dLoneliness 4 10 17 16 12 7 11 8 5 9 20 12
Ill health 2 19 7 14 15 9 49 23 6 6 29 11 H
unga
ryH
unga
ryDependent on others 11 11 5 18 14 8 18 19 14 6 11 4
Tired 3 4 8 10 14 10 17 6 7 7 13 19 U
nite
dU
nite
dFar away 38 19 25 21 61 32 2 13 33
Stat
es33 14 22
Stat
es
Boredom 14 16 6 12 16 12 15 8 12 12 16 17 Ca
nada
Cana
daEnjoyment 21 16 17 23 14 29 5 3 37 37 35 15
None of the above 0 1 1 2 0 2 1 1 2 2 1 2
Donrsquot know 2 2 3 3 2 2 1 2 0 Ch
ina
6 Ch
ina
hart 7 Many young employees think they are not on course to achieve target retirement income Ja
pan
Japa
n Do you think you will achieve this income [your estimated income needed in retirement]
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
I donrsquot know if I am on course to 56 37 57 59 50 39 49 48 48 41 22 68 achieve my retirement income
No I am on course to achieve around one-quarter (25) of my 10 14 9 13 15 14 14 13 10 10 10 7 retirement income
No I am on course to achieve around 12 20 14 11 19 19 18 15 12 11 23 12 half of my retirement income
No I am on course to achieve around three-quarters (75) of my 8 14 7 4 8 15 9 8 6 11 20 5 retirement income
Yes I am on course to achieve my 15 15 13 14 8 13 11 17 25 27 25 8 retirement income
CQ
CQ
39 | The Young Pragmatic and Penniless Generation
Chart 8 Young people in most countries expect to retire before 65 Q At what age do you expect to retire from all paid employment
Net
herl
ands
Ger
man
y
Swed
en
Uni
ted
Kin
gdom
Fran
ce
Spai
n
Pol
and
Hun
gary
Uni
ted
Stat
es
Cana
da
Chin
a
Japa
n
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
40 or under 0 1 1 0 0 1 3 1 5 12
41-50 1 2 3 5 2 2 6 3 9 4 37 9
51-59 4 4 4 6 2 4 11 5 7 10 30 1
60 5 11 8 12 10 13 19 12 12 16 21 27
61-64 2 11 10 2 20 7 4 13 5 3 1 2
65 17 22 44 31 34 32 16 26 26 32 3 25
66-69 42 32 15 9 12 29 20 13 9 9 0 1
70 19 11 10 18 10 5 10 9 13 12 0 6
71+ 5 5 5 9 4 5 5 3 7 5 1 4
Never 2 1 1 2 2 2 6 4 1 0 0
Donrsquot know 2 3 2 5 3 2 8 9 5 5 1 13
Mean 67 65 65 65 64 65 63 64 63 64 53 59
Median 67 65 65 65 65 65 65 65 65 65 55 60
Chart 9 Younger employees feel they donrsquot have money to invest for retirement Q What is the single biggest obstacle to you saving for retirement right now
Net
herl
ands
Ger
man
y
Swed
en
Uni
ted
Kin
gdom
Fran
ce
Spai
n
Pol
and
Hun
gary
Uni
ted
Stat
es
Cana
da
Chin
a
Japa
n
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
The uncertain economic environment 19 8 13 9 13 19 11 14 12 9 29 27
Lack of money to invest 28 41 33 43 47 34 48 55 47 50 6 19
Fear of poor investment returns over the coming years 2 5 10 7 5 6 8 2 6 8 14 6
Complexity of investment products 4 4 4 3 5 3 5 2 12 5
I donrsquot know how to go about investing for the long-term 2 3 10 8 5 5 3 3 6 8 7 9
The fees charged by financial services companies 2 4 4 2 4 3 4 2 3 5 2 5
I canrsquot afford to take financial advice 3 3 6 8 2 4 3 5 3 2 3 2
I donrsquot trust the financial services industry 12 11 8 6 5 10 6 2 2 3 5 4
I donrsquot see the need to save for the long-term 6 1 2 2 3 3 3 1 2 1 4 3
Concerns about unstable currencies currency fluctuations 2 5 1 3 3 3 4 3 4 5 15 2
Other (PLEASE STATE) 3 3 1 1 3 2 4 6 2 2 1
Donrsquot know 17 12 11 7 8 6 3 6 8 6 3 17
The Young Pragmatic and Penniless Generation | 40
Chart 10 More money would incentivize young employees to save for retirement Q Which if any of the following would encourage you to save for retirement
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsMore generous tax breaks on long-term savings and pensions 20 44 30 32 27 23 42 42 33 43 40 32 products
Ger
man
yG
erm
any
Access to financial education so that I am more aware of what 24 6 14 21 16 22 21 12 23 24 43 25 I need to do for myself
Swed
enSw
eden
Access to professional financial advice so that I have personalized
Uni
ted
20 24 23 23 15 21 25 9 22 23 44 13 U
nite
drecommendations on what steps
Kin
gdom
Kin
gdom
I need to take
Simpler investment products that 12 33 19 28 20 Fr
ance
18 27 16 32 28 36 10 Fr
ance
I can understand with less jargon
Better and more frequent information about my retirement 16 28 20 27 27 23
Spai
n20 18 25 31 45 22
Spai
nsavings
Better legal protection in case I am 12 18 13 18 10 24 18 13 13 19 21 6 P
olan
dP
olan
dsold the wrong product
A pay rise 46 54 44 64 55 50 70 72 67 64 53 37
A better retirement plan pension H
unga
ryH
unga
ry27 32 25 33 29 26 42 35 39 44 33 32 match from my employer
Other 4 2 1 1 2 2 3 3 2 U
nite
d3 0
Uni
ted
Stat
esSt
ates
Donrsquot know 17 9 16 10 10 12 3 8 8 5 3 17
Not applicable - I already have 3 3 4 2 2 1 1 1 2 2 3 sufficient savings Ca
nada
Cana
da
Chin
aCh
ina
Chart 11 A majority of younger employees do not have a written plan for retirement Q Which of the following best describes your retirement planning strategy
Japa
n Ja
pan
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
I have a written plan 7 18 10 9 6 8 6 5 13 10 8 4
I have a plan but it is not written 24 47 37 25 23 31 29 31 37 44 55 24
down
I do not have a plan 61 32 51 61 62 55 62 58 45 42 34 61
Donrsquot know 7 3 3 5 8 6 3 6 4 4 3 12
41 | The Young Pragmatic and Penniless Generation
Chart 12 For young employees friends and family are the leading source of retirement savings information Q And which of these sources (of information) is most important to you
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
Bank adviser 6 11 19 5 25 5 7 4 3 17 10 2 N
ethe
rlan
dsN
ethe
rlan
dsProfessional financial adviser 12 22 10 12 10 19 19 22 21 25 19 10
Insurance agent spokesperson 3 10 2 3 1 3 6 2 3 0 3 2 G
erm
any
Ger
man
yInsurance company website 3 1 3 2 4 4 2 2 1 3 1
Personal finance websites online 8 5 7 8 5 4 10 8 12 6 10 8 retirement planning tools Sw
eden
Swed
enPersonal finance media 2 2 2 2 2 6 3 1 2 1 6 2
Government website 7 1 3 6 U
nite
d5 2 3 3 2 3 7 1
Uni
ted
Kin
gdom
Kin
gdom
Bank website 2 3 3 2 1 0 3 2 1 6 3 3
My employer 12 8 4 9 4 7 5 12 8 5 4 1 Fr
ance
Fran
ceAccountant 2 6 4 4 1 3 1 3 5 5 1 3
Lawyer 2 3 1 2 2 8 4 2 1 2 2 0 Sp
ain
Spai
nFriends and family 21 22 30 28 24 26 18 24 26 20 25 24
None of these P
olan
dP
olan
dNot applicable 21 7 16 18 19 13 17 15 14 9 5 41
Hun
gary
Hun
gary
Chart 13 Most young workers feel their employer should provide some kind of pension Q In the future what if anything should employers do to help people plan for retirement
Uni
ted
Uni
ted
Stat
esSt
ates
Cana
daCa
nada
Chin
aCh
ina
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 Ja
pan
Japa
n Employers should be required to 24 43 20 40 21 26 20 28 37 34 20 30 contribute to workersrsquo pensions
Employers should be required to make a pension available but not to 12 13 7 17 20 15 15 4 11 14 22 5 contribute into it
Employers should not be required to provide pensions but should 15 9 12 8 9 8 11 6 11 9 9 11 provide information on how to plan for retirement
Employers should provide a range of flexible benefits and 13 18 18 16 15 27 25 28 21 22 45 12 allow individuals to choose which benefits they actually want
Nothing ndash it should be left to individual employees to take care 2 2 5 1 4 3 3 5 6 5 1 9 of themselves
Nothing ndash it should be left to the government to take care of its 2 5 5 2 5 8 15 14 1 4 0 4 citizens
Donrsquot know 30 10 32 17 27 12 12 15 13 13 3 29
The Young Pragmatic and Penniless Generation | 42
Chart 14 Workplace pensions are relatively low down in young workersrsquo priorities when choosing a job Q How important to you would the following workplace benefits be if you were choosing your next job
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsBasic salary 86 93 88 91 88 92 90 94 90 93 96 94
Holiday entitlement 87 94 89 91 92 94 91 94 93 94 96 91 G
erm
any
Ger
man
yOvertime and bonus pay 86 93 87 88 89 90 89 94 90 91 97 90
Location of workplace 88 91 86 92 89 90 89 92 93 93 92 86 Sw
eden
Swed
enMedical health insurance 73 92 84 65 86 87 88 87 93 94 98 83
Opportunities for career progression 86 91 81 90 90 94 91 94 92 91 96 81 U
nite
dU
nite
dAccess to a workplace retirement 85 85 81 82
Kin
gdom
78 84 80 78 84 86 93 74 K
ingd
omplan with employer contributions
Access to good training provision 85 87 85 88 86 91 85 93 86 90 95 74 Fr
ance
Fran
ceFlexible working hours 79 87 58 86 81 89 81 87 91 91 92 57
Life insurance 72 75 79 69 80 82 Sp
ain
84 80 81 88 93 74 Sp
ain
(death in service benefits)
Phased retirement or other employer programs providing for 74 54 75 71 72 81 76 74 76 81 91 65
Pol
and
Pol
and
a transition into retirement
Ability to work past the normal 68 57 64 65 64 74 72 65 74 76 80 70 retirement age H
unga
ryH
unga
ry
Access to a workplace retirement 62 74 61 68 59 77 61 47 68 74 89 65 plan without employer contributions U
nite
dU
nite
dSt
ates
Stat
esEmployee share plans 50 72 54 65 59 73 61 51 64 73 91 55
Access to creche help with the 67 75 64 56 69 79 75 83 58 69 89 68 cost of childcare Ca
nada
Cana
da
Opportunities for foreign travel 53 54 60 55 50 71 58 66 57 61 79 37
Company car 51 46 45 47 49 63 51 49 36 49 69 Ch
ina
39 Ch
ina
Japa
n Ja
pan
Chart 15 Young workers think the state pension will need to be reformed Q With the cost of government pensions becoming a greater concern as people live longer which if any of the following do you think
the government should undertake
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
The government should reduce the overall cost of state pension 15 33 16 15 16 20 28 22 21 26 30 16 provision by reducing the value of individual pension plans
The government should increase overall funding available for the 12 21 30 22 14 34 19 26 21 18 29 10 state pension through raising taxes
43 | The Young Pragmatic and Penniless Generation
he government should take a alanced approach with some 27 26 12 30 28 23 24 16 34 31 38 41 eductions in individual payments nd some increases in tax
he government should not do nything State pension provision 7 2 12 5 3 4 3 3 5 4 0 5 ill remain perfectly affordable in he future
onrsquot know 38 19 29 29 39 20 26 34 19 21 4 28
Net
herl
ands
art 16 Products which protect against investment risk are the most important to young workers ( interested) Thinking about the types of financial products you could purchase to help provide you with security in retirement on a scale of 1 to 5
how interested are you in the following options G
erm
any
Swed
en
Uni
ted
Kin
gdom
ase 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 Fr
ance
100 100 100 100 100 100 100 100 100 100 100 100
product providing a guaranteed etirement income stream or 75 81 73 76 74 83 78 76 87 85 94 69
Spai
nifetime income in retirement
product which protects my 74 79 73 76 72 82 77 74 84 86 94 65 etirement income against inflation P
olan
d
product which guarantees that I 72 82 73 78 75 81 76 73 86 86 90 67 onrsquot lose my initial investment H
unga
ry product which helps meet the ost of long-term care if I become 74 79 74 77 70 79 76 71 86 85 84 66
Uni
ted
nable to look after myself St
ates
product which protects my capital 71 81 71 76 68 76 77 73 84 83 93 65 rom poor investment returns Ca
nada
product which generates a etirement income and allows 69 78 71 75 68 81 77 72 84 86 94 70 e to take a lump sum from the
Chin
anvestment should I need to
product where the annual 66 78 68 75 72 79 77 70 85 86 87 64 anagement charges are kept low Ja
pan
product which enables me to eep some control over how my 71 73 70 75 72 80 75 69 88 85 91 63 avings are invested during my etirement
product which manages the sset allocation so that I am never 68 70 67 73 66 76 71 67 80 83 95 60 xposed to a level of risk Irsquom not omfortable with
product which continues to rovide a retirement income to my 74 78 71 75 73 81 79 73 86 82 94 60 pouse in the event that I die first
product which protects my family gainst having to pay estate taxes 73 76 71 74 75 81 75 69 82 82 89 56 hen I die
product which locks in investment 72 71 63 73 64 71 59 56 81 84 89 61 eturns during the good years
Tbra
Tawt
D
ChQ
B
Arl
Ar
Ad
Acu
Af
Armi
Am
Aksr
Aaec
Aps
Aaw
Ar
The Young Pragmatic and Penniless Generation | 44
Chart 9 The younger generation has more negative associations with retirement Q Which if any of the following words do you most associate with retirement
44 Leisure 39
36 Freedom 30
17 Far away 26
25 Insecurity 25
25 Enjoyment 21
19 Poverty 19
15 Ill health 17
9 Boredom
13
16 Opportunity
13
10 Dependent on others
12
9 Loneliness
11
0
r olds
7Tired
1
6Excitement
6
2None of the above
1
2Donrsquot know 2
All 20 to 29 yea
Aspirations and responsibilities for retirement Income levels in retirement ung people have similar retirement aspirations to the general A high proportion (47) do not know if they are on course
pulation for example travel (63) spending time with to achieve their retirement income goal Combined with the
iends and family (61) and pursuing new hobbies (52) high level of financial responsibility young employees expect
r them however retirement also includes the responsibility of to assume in retirement it is clear that people not only need
ring for others Two-fifths (40) believe that lsquoadult children to build much greater awareness of what kind of financial
retirees should help through providing financial support to pressures they are likely to face in retirement but also require
eir parents if neededrsquo and 28 believe that this will affect greater support in establishing realistic retirement income
em directly in retirement through providing financial support targets which are capable of meeting their needs
their parents A fifth (21) also expect to spend some of
eir retirement caring for other family members while just
donrsquot expect to provide for anyone compared to 40 of all
ployees Clearly todayrsquos young employees anticipate serious
ancial responsibilities in their retirement
Yo
po
fr
Fo
ca
of
th
th
to
th
30
em
fin
The Young Pragmatic and Penniless Generation | 16
Chart 10 Many young employees do not think that they are on course to achieve target retirement income Q Do you think you will achieve this income [your estimated income needed in retirement]
Base 20-29 year olds
Yes I am on course to achieve my retirement
income
16
47
12
16
10
I donrsquot know if I am on course to achieve my
retirement income
No I am on course to achieve around
one-quarter (25) of
No I am on course to achieve around half of my
retirement income
No I am on course to achieve around
three-quarters (75) of my retirement income
532
China
586
Japan
United S
tate
s
628
Poland
635
Canad
a
636
Hunga
r
638
y
Fran
ce
645 647
Spain
Sweden
649
United K
ingdom
651
Germ
any
653
Nether
lands
666
my retirement income
When will young people retire Media reports about the need to raise the age of retirement appear to have influenced younger employees Fully 44 of 20-29 year
olds do not expect to be able to choose their retirement date although the younger generation do expect to retire at a similar age
to older employees 63 This varies considerable by country In the Netherlands young employees expect to retire eight years later
than those in Japan Some countries such as China and Japan have surprisingly low expected retirement ages suggesting that young
employees may benefit from having a better understanding of when government or workplace retirement benefits kick in
Chart 11 Young people in most countries expect to retire before 65 Q At what age do you expect to retire from all paid employment
Base 20-29 year olds
Despite expecting to retire at the same age as their parents younger employees are more open to a transition into retirement
reflecting their more flexible outlook toward work Around half (51) are happy to change the way they work in some way as they move
into retirement Just 8 expect to keep working as they do currently
17 | The Young Pragmatic and Penniless Generation
Part 3 What is holding young employees back Insights into what young employees feel is holding them back from saving or saving more can be used to encourage younger people to adopt more positive savings behaviors This chapter explores the attitudes of young employees toward the financial obstacles they face and asks what actions they have taken in preparation for retirement The findings reveal that while the majority lacks adequate planning for their retirement needs financial shortcomings are only part of the stor y Spending preferences play a key role in the savings gap of advanced economies
The Young Pragmatic and Penniless Generation | 18
Lack of money to invest 37
16 The uncertain economic environment
7 Fear of poor investment returns over the coming years
6 I donrsquot trust the financial services industry
6 I donrsquot know how to go about investing for the long-term
4 oncerns about unstable currencies currency fluctuations
4 Complexity of investment products
4 I canrsquot afford to take financial advice
3 The fees charged by financial services companies
3 I donrsquot see the need to save for the long-term
Other 2
Donrsquot know 8
A pay rise
More generous tax breaks on long-term savings and pensions products
A better retirement plan pension match from my employer
Better and more frequent information about my retirement savings
Simpler investment products that I can understand with less jargon
Access to professional financial advice so that I have personalized recommendations on what steps I need to take
Access to financial education so that I am more aware of what I need to do for myself
Better legal protection in case I am sold the wrong product
Other
Not applicable - I already have sufficient savings
Donrsquot know
Obstacles and incentives to saving
Chart 12 Younger employees feel they donrsquot have money to invest for retirement Q What is the single biggest obstacle to you saving for retirement right now
Base 20-29 year olds
C
What is the single biggest obstacle preventing twentysomethings that they rank pressing and desirable life goals such as marriage
m saving for retirement Not having enough money to invest starting a family vacations and other leisure activities above the
top of the list cited by over a third (37) although this figure need to plan for retirement This suggests the savings gap is
ops to just 6 in the emerging market of China where mean preference-driven
omes are the lowest by far ($18000) suggesting that lack of
sh may be partly a state of mind Young employees in China The biggest obstacle to retirement savings cited by one-eighth
actually more worried about local concerns such as economic (13) of respondents is either not knowing how to invest for the
certainty (29) and currency instability (15) Behavioral long-term or the complexity of investment products charges and
ance has an impact too with the way young employees frame fees Ready solutions to this include improving young employeesrsquo
eir financial priorities creating its own obstacles to saving financial literacy about retirement planning and creating easier
many as 57 of 20-29 year olds believe that saving for access to professional financial advice
tirement is important but not a current priority suggesting
fro
is
dr
inc
ca
are
un
fin
th
As
re
19 | The Young Pragmatic and Penniless Generation
Chart 13 More money would incentivize young employees to save for retirement Q Which if any of the following would encourage you to save for retirement
Base 20-29 year olds
57 A pay rise
More generous tax breaks on long-term savings and pensions products
34
A better retirement plan pension match from my employer
33
Better and more frequent information about my retirement savings 26
Simpler investment products that I can understand with less jargon 24
Access to professional financial advice so that I have personalized recommendations on what steps I need to take 23
Access to financial education so that I am more aware of what I need to do for myself 22
Better legal protection in case I am sold the wrong product 16
Other 2
Not applicable - I already have sufficient savings 2
Donrsquot know 10
Chart 14 Very few younger employees have a written plan for retirement Q Which of the following best describes your retirement planning strategy
Base 20-29 year olds
5 Donrsquot know I have a
written plan
8
34 I have a plan but it is not
52 written down
I do not have a plan
Turning to incentives greater remuneration predictably tops a list Retirement planning of what would encourage 20-29 year olds to save for retirement Retirement planning is essential to adequate retirement saving
More tellingly a third (33) would like their employer to provide although it is somewhat lacking in todayrsquos younger employees
a better retirement plan into which both parties contribute Over half (52) have no retirement planning strategy at all
Better information and simple products would also help more and only 8 have noted down their retirement strategy
people to save A quarter (26) would be encouraged to save by
better and more frequent information about retirement savings Nevertheless the respondents polled believe that the current
while a similar number (24) want simple investment products global economy makes retirement planning increasingly
that are easy to understand As with the previous question a important ndash 71 agreed with this statement It is clear from this
lack of investment knowledge and the complexity of investment that young people between the ages of 20 and 29 do not lack
products are revealed as obstacles to savings the will to save they lack the opportunity
The Young Pragmatic and Penniless Generation | 20
Part 4 Creating the right conditions for young employees to save How may young employeesrsquo obstacles to saving be overcome For retirement readiness this will be a defining question of the early twenty-first centur y ndash and an extremely challenging one given the number of serious issues affecting younger employeesrsquo finances What was learned in the previous chapter about encouraging young employees to save is a start This chapter examines which areas and triggers to saving can be unlocked and whether government employer or individual should take most responsibility
21 | The Young Pragmatic and Penniless Generation
Friends and family
Professional financial adviser
17
24
Bank adviser 9
Personal finance websites online retirement planning tools
My employer
Government website
4
8
7
Insurance agent spokesperson
Accountant
3
3
Personal finance media 3
Lawyer
Bank website
3
2
Insurance company website
Donrsquot know
2
15
Information and advice on retirement saving strong theme revealed by our findings is that younger This finding is remarkably consistent across the countries
mployees want more information on savings products and sur veyed despite significant differences in market makeup
etter access to advice The largest share 24 (compared although some differences exist For instance a quar ter
o 17 for all employees) finds friends and family to be the (25) of young employees in France turn to bank advisers
ost important source of advice followed by professional for financial information nearly triple the number among all
dvisers (17) and bank advisers (9) That young employees young people (9)
urn to friends and family first suggests an unmet need for
rofessional financial advice This is both a challenge and an
pportunity for the financial ser vices sector
hart 15 For young employees friends and family are the leading source of retirement savings information Which of these sources (of information) is most important to you
ase 20-29 year olds
A
e
b
t
m
a
t
p
o
CQ
B
What is the role of the workplace in retirement planning Does this influence what retirement benefits younger
In response to shifting employment patterns todayrsquos younger employees expect from their workplace Certainly a majority
employees are less loyal to their employers than older workers favor workplace retirement plans with 61 believing that these
Fully 39 of 20-29 year olds are planning to look for a new job should be a fundamental part of pay (although this is lower
in the next 12 months compared to 29 of all workers and than for employees overall) and just 4 feel that retirement
31 frequently think about quitting their jobs Strikingly while planning should be left entirely to individuals
53 of all workers plan to stay with their current employer
until retirement just 37 of 20-29 year olds say this However there is evidence of a slight shift in perceptions
Younger workers are less likely to want workplace retirement
Doubtless much of this is because younger workers are more plans over other factors Of those who want employer
mobile and have more opportunities Another trigger to lower retirement plan contributions only 46 wanted this even if
employer loyalty may be the expectation of holding more jobs it reduced benefits and 35 (compared to 43 of all workers)
and even pursuing multiple careers over a working lifetime if it cut jobs
The Young Pragmatic and Penniless Generation | 22
Donrsquot know Employers should be
required to contribute to workersrsquo pensions
5 Nothing ndash it should be left to the government to take 18
care of its citizens 28
4 Nothing ndash it should be left to individual employees to
take care of themselves
13
22
Employers should provide a range of flexible benefits
and allow individuals to choose which benefits they
actually want
10 Employers should
be required to make a pension available but not
to contribute into it
Employers should not be required to provide pensions but should
provide information on how to plan for retirement
Chart 16 Most young workers feel that their employer should provide some kind of pension Q In the future what if anything should employers do to help people plan for retirement
Base 20-29 year olds
Are other workplace benefits more important Younger workers were asked to rate the importance of various workplace benefits The results reveal how highly they value the
elements of their compensation package Chart 17 shows that 87 of young employees believe a workplace retirement plan with
employer contributions would be an important factor when choosing their next job While retirement may be decades away for
twentysomethings 80 believe programs provide for a phased retirement are important
23 | The Young Pragmatic and Penniless Generation
Basic salary 94
93 Holiday entitlement
91 Overtime and bonus pay
91 Location of workplace
88 Medical health insurance
87 Opportunities for career progression
Access to a workplace retirement plan with employer contributions 87
Access to good training provision 86
Flexible working hours 85
Life insurance (death in service benefits) 81
Phased retirement or other employer programs providing for a transition into retirement 80
Ability to work past the normal retirement age 70
Access to a workplace retirement plan without employer contributions
67
Employee stock plans 65
Access to creche help with the cost of childcare 59
Opportunities for foreign travel 50
Company car 43
Chart 17 Workplace retirement plans are a relatively low priority for younger workers when choosing a job How important to you would the following workplace benefits be if you were choosing your next job
ase 20-29 year olds
Q
B
Regarding workplace benefits provided by employers today considered just enough to fulfill basic needs and in China a
young employees are about as likely as all workers to be offered fully formed nationwide retirement system is still some way off
retirement tools such as annual plan statements and online The future shape and affordability of these plans is debated in
tools from their employer though it is concerning that 24 do all of the sur vey countries to var ying degrees
not know if such tools are available or not Those provided are
considered helpful Younger workersrsquo views on reform are important because
changes to government retirement benefits are more likely
The role of government to affect them than any other part of the working population
The generosity of government retirement benefits varies The main concern cited by 57 is of facing less generous
considerably in the countries sur veyed In some countries such government retirement benefits than those enjoyed by their
as France government benefits are the primar y mechanism parentsrsquo generation
for funding retirement while in the United Kingdom they are
The Young Pragmatic and Penniless Generation | 24
The government should reduce the overall cost of state pension provision by
reducing the value of Donrsquot know individual pension plans
25 22
4 The government should not do anything State pension provision will
remain perfectly affordable in the future
28
21 The government should increase overall funding
available for the state pension through
raising taxes
The government should take a balanced approach with some reductions in individual payments and
some increases in tax
Chart 18 Young workers think that the government retirement system will need to be reformed Q With the cost of government retirement benefits becoming a greater concern as people live longer which
if any of the following do you think the government should undertake
Base 20-29 year olds
The younger generation believes that the government cannot What do young employees look for in a retirement product continue to provide as it does now ndash just 4 think government The sur vey findings show that young employees have
benefits will remain affordable to society However there is no reser vations about employer and government retirement
consensus on what governments should do to reform retirement benefits So what then do they want from a private savings
plan systems Over a fifth (22) think retirement entitlements product The savings product feature most valued by younger
should be cut just over a fifth (21) think governments should workers is protection against investment risk (Char t 19)
raise taxes and more than a quarter (28) think a mixture of This may be in the form of no loss of initial investment a
the two is the best solution Another quarter admits that they guaranteed income stream or protection against inflation
donrsquot know what should be done This is reasonable ndash the initial investment of those farthest
from retirement is most at risk However less consideration
is given to savings grow th through investment returns This
suggests that there is an oppor tunity to educate young
workers about the trade-off between returns and risk
management and what they stand to gain
25 | The Young Pragmatic and Penniless Generation
Chart 19 Products which protect against investment risk are the most important to young workers ( interested) Q Thinking about the types of financial products you could purchase to help provide you with security in retirement on a scale of 1 to 5
how interested are you in the following options
Base 20-29 year olds
A product providing a guaranteed retirement income stream or lifetime income in retirement 82
A product which protects my retirement income against inflation 81
A product which guarantees that I donrsquot lose my initial investment 81
A product which helps meet the cost of long-term care if I become unable to look after myself 80
A product which protects my capital from poor investment returns 79
A product which generates a retirement income and allows me to take a lump sum from the investment should I need to 79
A product where the annual management charges are kept low 78
A product which enables me to keep some control over how my savings are invested during my retirement 77
A product which manages the asset allocation so that I am never exposed to a level of risk Irsquom not comfortable with 76
A product which continues to provide a retirement income to my spouse in the event that I die first 75
A product which protects my family against having to pay estate taxes when I die 72
A product which locks in investment returns during the good years 70
The lsquodefined ambitionrsquo retirement system in This removes some of the disadvantages of leaving
the Netherlands a sustainable retirement solution retirement liabilities exclusively up to employers
for young workers (defined benefit) or employees (defined contribution)
In the Netherlands as elsewhere young workers are faced In the Netherlands this is likely to involve legislation which
with an increasing retirement age decreasing government lets retirement funds automatically adjust pay-outs and
suppor t for retirement and declining traditional defined retirement age as life expectancy changes xii
benefit employer retirement plans Reforms proposed
by the Dutch may show a way for ward for all mature and This model has garnered interest elsewhere In the
aging economies United Kingdom Pensions Minister Steve Webb expressed
interest on a more limited scale with a government
rsquoDefined ambitionrsquo proposes that risks are not taken on fully guarantee for a minimum rate of return for defined
by either employer or employee but are shared contribution retirement plans
The Young Pragmatic and Penniless Generation | 26
Recommendations Enabling young workers to save The studyrsquos findings reveal that the majority of young workers (66) are either saving consistently or aspire to start saving but face challenges including debt low pay and funding for significant life events and generational changes to the economic landscape and government and employer support If young people are to achieve a prosperous retirement their willingness to save should be met with better opportunities to save Here is what can be done by employers governments and young people themselves to address retirement planning concerns for younger adults
27 | The Young Pragmatic and Penniless Generation
Individuals Employers and governments
Determine how much income you need in retirement Auto-enroll employees into a workplace retirement plan Young people accept the need to save for retirement but donrsquot If an auto-enrollment workplace retirement plan is feasible
know how to act on that need They can become more retirement this can play a major role in getting young workers saving early
savvy simply by talking to friends and family (as do 24 of and regularly Combined with auto-escalation (the automatic
our respondents already) or employers going online to use annual increase in retirement plan contributions) and matching
retirement calculators or reading the personal finance media contributions it can lead to greater retirement readiness
Seek out a financial advisor Provide more flexible savings products through the workplace Young people are faced with life events that make it easy to Not all savings journeys start with a retirement plan particularly
feel overwhelmed by financial priorities in addition to retirement for young people who may think of retirement as lsquotoo far awayrsquo
planning Soliciting advice from a finance professional early in Employers can kick-start the savings habit in younger workers
life (17 of young employees have done so already) helps with by providing flexible easy to access and easy to understand
planning and priorities and making sense of long-term finances savings plans as a more attractive starter option
Start saving now and save consistently Make company retirement plans more portable As with all employees young people will strengthen their Young people move jobs much more often than previous
retirement readiness simply by saving regularly Today only 25 generations of employees so savings like DC retirement plans
of young people always save yet even small regular amounts need to follow employees when they change jobs
will improve retirement readiness over time
Make tax incentives more effective Ask your employer about workplace retirement savings plans All countries encourage long-term savings through tax relief but
and other retirement benefits young people often arenrsquot aware of this or donrsquot understand it
While one third (33) of young people believe that a workplace A more targeted system of tax relief could help provide clearer
retirement savings plan provides a major opportunity to start and simpler signals to younger people about the financial
saving employers often experience difficulties in engaging benefits of long-term saving
younger employees in discussions about retirement planning
The workplace is an important channel for achieving retirement Make better financial education central to the workplace readiness so be sure to max out on any employer contributions retirement offer
Young people who aspire to save may be prevented from
doing so by setting the wrong financial priorities Workplace
retirement education ndash alongside professional advice ndash can help
guide young people toward the right long-term priorities at an
earlier age in life
The Young Pragmatic and Penniless Generation | 28
29 | The Young Pragmatic and Penniless Generation
Glossary
Aegon Retirement Readiness Index (ARRI) c areer average retirement plan The ARRI assesses the relative levels of retirement A type of defined benefit plan that is based on an
preparedness of employees across different countries on a employeersquos average retirement earnings over the duration
scale from 1 to 10 The Index is based on three questions of plan membership Same as average salary plan
covering attitudes and three questions covering behaviors
defined ambition (DA) plan average salary plan A type of retirement plan in which retirement plan risks
A type of defined benefit plan that is based on an are shared between the employer and the employee
employeersquos average retirement earnings over the duration It offers greater certainty to savers around the final value
of plan membership Same as career average plan of their retirement assets than in DC plans and less
cost volatility for employers than with DB plans In the
a nnuity Netherlands Defined Ambition (DA) retirement plans are
A form of contract sold by life insurance companies that being introduced in order to help relieve the pressure on
guarantees a fixed or variable payment to the annuitant employers while still trying to provide employees with a
at some future time usually retirement All capital in the more secure retirement plan The United Kingdom too is
annuity grows tax-deferred looking at DA retirement plans as a solution
auto enrollment defined benefit (DB) plan An employer-sponsored retirement plan in which the An employer-sponsored retirement plan where the amount
employer is able to enroll an employee without that of future benefits an employee will receive from the plan is
employeersquos express authorization The employer determines defined typically by a formula based on salary history and
what percentage of the employeersquos salary or wages is years of service The amount of contributions the employer
contributed to the plan The employee is able to change is required to make will depend on the investment returns
this percentage and can opt out of enrollment in the plan experienced by the plan and the benefits promised
Contrast defined contribution plan
a uto-escalation A feature of a plan which automatically increases the defined contribution (DC) plan percentage of (retirement) funds saved from salary An employer-sponsored retirement plan such as a 401(k)
This feature generally uses a default or standard plan or a 403(b) plan in the United States in which
contribution escalation rate contributions are made to individual participant accounts
Depending on the type of DC plan contributions may be
B aby Boomers made by the employee the employer or both
A term used to refer to people generally born between
the end of World War II in 1945 and the mid 1960s The employeersquos benefits at retirement or termination of
Other generations Silent Generation - the generation born employment are based on the employee and employer
between 1925 and 1945 Generation X - the generation contributions and earnings and losses on those
born between 1965 and 1979 Millennials or Generation contributions See also 401(k) and 403(b) plan
Y - the generation born between 1980 and 2000 and often Contrast defined benefit plan
classified as the children of Baby Boomers
The Young Pragmatic and Penniless Generation | 30
401(k) plan An employer sponsored retirement plan that enables
employees to make tax-deferred contributions from their
salaries to the plan
403(b) plan An employer-sponsored defined contribution plan that
enables employees of universities public schools and
non-profit organizations to make tax-deferred contributions
from their salaries to the plan
final salary plan A type of defined benefit plan in which retirement
benefits are based on final retirement salary in the years
immediately before retirement benefits are received
Millennials A term used to refer to the people born from about 1980
to 2000 brought up using digital technology They are
often classified as the children of Baby Boomers
r etirement (or pension) plan Provides replacement for salary when a person is no
longer working due to retirement In the case of a defined
benefit retirement plan the employer or union contributes
to the plan which pays a predetermined benefit for the
rest of the employeersquos life based on length of service and
salary Payments may be made either directly or through
an annuity Retirement plan payments are taxable income
to recipients in the year received The employer or union
has fiduciary responsibility to invest the retirement plan
funds in stocks bonds real estate and other assets earn
a satisfactory rate of return and make payments to retired
workers Retirement plan funds holding trillions of dollars
are one of the largest investment forces in the stock
bond and real estate markets If the employer defaults in
the United States retirement plan payments are usually
guaranteed by the Pension Benefit Guaranty Corporation
(PBGC)
variable annuities (VA) An insurance contract in which the insurance company
guarantees a minimum payment at the end of the
accumulation period The payments may vary depending
on the financial performance of the managed portfolio
31 | The Young Pragmatic and Penniless Generation
About Aegon Transamerica Center for Retirement Studiesreg and Cicero Consulting
Aegon Transamerica Center Aegon is an international life insurance pensions and asset reg management company with businesses in over 20 markets for Retirement Studies in the Americas Europe and Asia Aegon companies employ The Transamerica Center for Retirement Studiesreg (TCRS) is
around 24000 people and serve millions of customers a division of the Transamerica Institute a nonprofit private
worldwide foundation TCRS is dedicated to educating the public on
wwwaegoncom emerging trends surrounding retirement security in the
United States TCRSrsquo research emphasizes employer-sponsored
In 2010 Aegon became a founding member of the Global retirement plans issues faced by small to mid-sized companies
Coalition on Aging which seeks to raise awareness of aging and their employees and the implications of legislative and
issues among policymakers and the general public A major aim regulatory changes Transamerica Institute is funded by
of the coalition is to transform the way we think and speak contributions from Transamerica Life Insurance Company and
about aging replacing the familiar rhetoric of lsquoproblemsrsquo with its affiliates and may receive funds from unaffiliated third-
a more positive discussion of lsquopossibilitiesrsquo and lsquoopportunitiesrsquo parties For more information about TCRS please refer to
wwwglobalcoalitiononagingcom wwwtransamericacenterorg
Cicero Consulting A leading consultancy firm serving the banking insurance and
asset management sector Cicero specializes in public policy
and communications consulting as well as global thought
leadership and independent market research Cicero was
established in 2001 and now operates from offices in London
Brussels Washington and Singapore As a market leader in
pensions and retirement research Cicero designed
and analyzed the research and contributed to the report
wwwcicero-groupcom
The Young Pragmatic and Penniless Generation | 32
Marta acebo Mark Green Patricia Plas
Paula alvarez douGlas henck scott roane
Frits bart wendel hoFMan thurstan robinson
Grace basile
lynette belFry
andrew berwick
Frans van der horst
tatsuo kai
herMan kaPPelle
Patti rowey
sarah russell
Joost van schaGen
robin boon Gaacutebor kePecs dick schiethart
bert-JaaP brons Marco keiM erik schouten
douG brooks
libby buet
kent callahan
JaiMe kirkPatrick
bas knol
roGer koch
anGela seyMour Jackson
kate sMith
renske stoker
Jeanne de cervens
dana chen
Peter kunkel
alexander kuiPers
eyleen sun
MartiJn tans
arkadiusz chMurzynski
heidi cho
brian lewis
Mike linder
GreG tucker
Mark twiGG
siMon clow siMon luke catherine wanG
robert colliGnon Jason Ma Marc van weede
catherine collinson GrzeGorz Mathea tiM willaert
wendy daniels
Michel denizot
edit drevenka
Paul Middleton
takaoh MiyaGawa
david Moulton
daniel wriGht
alex wynaendts
MacieJ zaPala
Jan driessen
kelly Fu
adrian Grace
Mark Mullin
Marcelle noltenius
stiG nybo
Peacuteter zatykoacute
vicky zeldin
Disclaimer This repor t contains general information only and does
not constitute a solicitation or offer No rights can be
derived from this repor t Aegon its par tners and any of
their affiliates or employees do not guarantee warrant
or represent the accuracy or completeness of the
information contained in the repor t
Acknowledgements
33 | The Young Pragmatic and Penniless Generation
References and notes i For a comparison of different retirement systems see lsquoPensions at a Glance 2011rsquo OECD 2011 ii As the survey was carried out online the survey results in China are based toward people living in urban areas iii ldquoPensions Marketsrdquo TheCityUK March 2013 p9 iv Global Employment Trends for Youth 2013 A generation at risk International Labour Organisation 2013 p2 v Eurostat July 2013 vi OECD Employment and Labour Markets Key Tables from OECD No 2 2012 vii The Federal Reserve Bank of New York 2012 Quarterly Report on Household Debt March 29 2013 viii World Bank ix lsquoWorld-class povertyrsquo The Economist February 27 2013
httpwwweconomistcomblogsanalects201302chinas-poor x lsquoThe Chinese slow down in char tsrsquo The Economist July 15 2013 xi lsquoChina rsquos welfare system difficult inflexible and blatantly unfairrsquo The Guardian April 23 2013
httpwwwtheguardiancomglobal-development2013apr23china-welfare-system-inflexible-unfair xii lsquo The Dutch experience with Defined Ambition pensions and the impact on companiesrsquo Aegon Global Pensions March 12 2013
httpwwwaegonglobalpensionscomenHomePublicationsNews-archiveNewsThe-Dutch-experience-with-Defined
Ambition-pensions-and-what-that-may-mean-for-companies-in-the-Netherlands-and-the-UK
shy
The Young Pragmatic and Penniless Generation | 34
Contact information HE ADQUARTER S
Aegon NV
PO Box 85
2501 CB The Hague
Telephone +31 70 344 32 10
w w waegoncom
MEDIA REL ATIONS
Telephone +31 70 344 89 56
Email gcc-iraegoncom
Countr y Index score
Germany 548
China 541
Canada 524
United States 519
The Netherlands 488
United Kingdom 486
Sweden 483
France 475
Hungar y 473
Poland 463
Spain 440
Japan 430
Total 489
Appendix 1 Aegon Retirement Readiness Index (ARRI) - technical note
Aegon Retirement Readiness Index (ARRI)-technical note 2013 Weightings (2012 in brackets) A sample of 12000 pre and post retirees was drawn from 1 Personal responsibilit y 20 (30)
twelve countries Of these 10800 (90) were pre-retirees 2 Level of awareness 30 (35)
and these were chosen for fur ther analysis of their plans 3 Financial capability Understanding 30 (25)
for retirement The Index that was developed forms an 4 Retirement planning 50 (50)
assessment of how well an individual perceives the adequacy 5 Financial preparedness 60 (60)
of his her own finances and financial awareness specifically 6 Income replacement 35 (35)
for addressing his retirement needs
Note that the weights devised to show the relative
The lsquotargetrsquo for the Index impor tance of each question in calculating the Index add to
The question on current savings activity was designated as the 225 These were then re-scaled so that a final scale of 1 to
target question (dependent variable) for predicting the level of 10 was calculated
preparedness for retirement Responses to this question were
then correlated with each of the six key questions (variables) Final scores by country below to understand which were driving the activity These weightings were multiplied by the actual scores for each
This was done because it was not felt to be correct to give respondent for each of the six Index questions and aggregated
each of the six variables described below an equal weight as to obtain a provisional score This was then adjusted to
they appeared to have quite different relationships to the give countr y scores out of 1 to 10 (A score of 1 to 10 had
target question sufficient differentiation to be used as the scale for analysis)
1 Personal responsibilit y for income in retirement
2 Level of awareness of need to plan for retirement
3 F inancial capability Understanding of financial matters
regarding plans for retirement
4 Retirement planning Level of development of plans
5 Financial preparedness for retirement
6 Income replacement Level of projected income replacement
The weighting To estimate the statistical significance of the decline in overall
scores in this yearrsquos Index is theoretically incalculable
Two things have changed from 2012 to 2013
1 C anada and China have joined the sample
2 The new countries have thus influenced the weights of
emphasis placed on the 6 variables used to calculate
the score hence the weights attached to the complex
calculation have changed
However it is noticeable that for countries which were sampled
in both time periods the mean scores for the six individual
variables have almost invariably declined and on average more
than half of them have shown a significant level of decline
In particular the question lsquoDo you think you will achieve this
incomersquo has for all countries shown a significant level of
decline We thus hypothesize that the comparative results
show a significant decline
The Young Pragmatic and Penniless Generation | 36
Net
herl
ands
Net
herl
ands
Net
herl
ands
Ger
man
yG
erm
any
Ger
man
yBase 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
Better off 7 4 23 Sw
eden
Swed
en11 5 7 8 3 11 14 50 5
Swed
en
About the same 19 18 27 23 8 19 18 13 29 29 24 21 U
ntie
dU
ntie
dU
nite
d Worse off 66 74 41 58 79 69 71 76 51 47 21 55
Kin
gdom
Kin
gdom
Kin
gdom
Donrsquot know 9 3 9 9 9 4 4 8 9 10 6 19
Fran
ceFr
ance
Fran
ce
Chart 2 Education of 20 ndash 29 year olds by country Q Please choose from the following list the highest level of educational or professional qualification you have
Spai
nSp
ain
Spa
in
Pol
and
Pol
and
Pol
and
Hun
gary
Hun
gary
Hun
gar y
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
dU
nite
d 100 100 100 100 100 100 100 100 100
Stat
es100 100 100
Stat
esSt
ates
Less than high school graduate 2 44 6 14 1 3 2 7 1 3 Ca
nada
Cana
daC
anad
aHigh school graduate 11 33 53 23 22 22 4 41 14 21 1 2
Some college or trade school 46 2 9 9 9 19 37 14 28 20 4 33 Ch
ina
Chin
aC
hina
College degree University degree 31 15 27 30 41 43 21 33 50 46 9 57
Postgraduate degree or 8 3 3 23 25 11 36 1 8 9 80 6 qualification Ja
pan
Japa
n Ja
pan
Other 2 4 1 1 1 2 0 5 0 6 2
None 0 1 1 0 1 0 0
NET Less than undergrad degree 61 82 70 47 34 46 43 66 42 45 11 37
NET Undergrad degree or higher 39 18 30 53 66 54 57 34 58 55 89 63
Chart 3 Aegon Retirement Readiness Index scores for young employees by country
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
NET Low Index (0-5) 80 64 79 81 85 78 81 73 65 61 61 87
NET Medium Index (6-7) 15 30 18 15 14 21 17 23 25 31 31 12
NET High Index (8-10) 4 6 3 3 1 2 2 4 10 8 7 1
Appendix 2 Country comparisons Chart 1 The majority of young employees believe that they will be worse off in retirement compared to their parents Q Do you think that future generations of retirees will be better off or worse off than those currently in retirement
37 | The Young Pragmatic and Penniless Generation
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsI always make sure that 27 34 27 26 17 14 19 22 35 33 32 20 I am saving for retirement
I only save for retirement G
erm
any
Ger
man
y21 27 20 13 17 21 16 6 17 24 20 24 occasionally from time to time
I am not saving for retirement now 6 11 8 11 5 15 9 4 10 8 9 5 although I have in the past Sw
eden
Swed
en
I am not saving for retirement 35 23 34 46 53 40 49 54 36 33 38 46 though I do intend to U
nite
dU
ntie
dK
ingd
omK
ingd
om I have never saved for retirement and 11 6 10 5 8 10 6 13 3 2 1 6 donrsquot intend to
Fran
ceFr
ance
Chart 5 Younger people are more likely not to be using any means of retirement savings Sp
ain
Spai
nQ Which financial means if any are you currently using to prepare for your retirement
Pol
and
Pol
and
only asked in Germany only asked in Spain
Hun
gary
Hun
gary
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
dSt
ates
Stat
es100 100 100 100 100 100 100 100 100 100 100 100
Defined benefit plan 16 10 25 29 15 3 76 11 20 13 5 Ca
nada
Cana
daDefined contribution plan 28 10 17 19 19 14 10 23 40 7 3
Private pension 8 18 14 10 5 9 4 13 12 40 66 4 Ch
ina
Chin
a Government pension social security 12 43 14 21 8 7 4 18 27 33 71 35
Stocks 5 12 14 7 4 17 7 2 13 10 23 9
Bonds 1 8 5 6 2 16 4 2 8 13 14 3 Ja
pan
Japa
n
Mutual funds 2 14 23 4 2 10 3 4 7 16 9 6
Investment insurances (annuities) 2 3 2 3 2 9 4 5 2 4 6 1
Savings accounts 23 37 38 25 23 6 29 15 36 37 65 36
Investment property 2 10 6 7 9 2 5 2 5 11 18 1
Employee stock purchase 1 1 1 4 1 29 0 4 1 7 1
My home 10 5 8 7 7 8 4 6 6 14 30 1
Reverse mortgage 1 4 2 4
My business 2 1 3 2 2 4 1 1 2 4 12 1
Inheritance 3 11 7 11 7 9 9 8 7 9 6 2
Annuities 1 15 2 2 1 4 3 2 1 2 8
Long-term care insurance 2 1 3 2 9 5 1 6 4 7 1
Life insurance 6 11 8 8 14 3 18 15 19 18 36 17
Unterstuumltzungskasse aus 2 Eigenmitteln finanziert
Unterstuumltzungskasse vom 2 Arbeitgeber finanziert
Chart 4 Younger employees are much more likely to aspire to save for retirement Which of the following best explains your approach to saving for retirement This can include money you contribute to any long-term
investment including pensions stocks and shares investment-linked insurances property etc
Q
The Young Pragmatic and Penniless Generation | 38
Plan de empleo mixto 2 (combinacioacuten de las dos anteriores)
Other 1 6 4 0 1 2 2 3 2 2 3 3
None nothing 8 14 12 23 25 31 6 27 21 17 3 24
Donrsquot know 29 6 17 13 19 8 4 9 7 7 0 9
hart 6 The younger generation has more negative associations of retirement Which if any of the following words do you most associate with retirement
Net
herl
ands
Net
herl
ands
Ger
man
yG
erm
any
Swed
enSw
eden
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
d100 100 100 100 100 100 100 100 100 100 100 100
Kin
gdom
Kin
gdom
Freedom 35 32 36 39 19 26 11 20 35 40 37 33
Opportunity 7 27 25 18 4 8 9 10 17 16 9 16 Fr
ance
Fran
ceLeisure 58 48 36 41 23 24 43 32 50 50 55 6
Excitement 2 5 3 8 2 6 1 2 17 17 4 3 Sp
ain
Spai
nPoverty 11 26 23 11 26 14 37 44 7 5 6 20
Insecurity 34 24 18 16 20 18 35 56 10 9 18 44 P
olan
dP
olan
dLoneliness 4 10 17 16 12 7 11 8 5 9 20 12
Ill health 2 19 7 14 15 9 49 23 6 6 29 11 H
unga
ryH
unga
ryDependent on others 11 11 5 18 14 8 18 19 14 6 11 4
Tired 3 4 8 10 14 10 17 6 7 7 13 19 U
nite
dU
nite
dFar away 38 19 25 21 61 32 2 13 33
Stat
es33 14 22
Stat
es
Boredom 14 16 6 12 16 12 15 8 12 12 16 17 Ca
nada
Cana
daEnjoyment 21 16 17 23 14 29 5 3 37 37 35 15
None of the above 0 1 1 2 0 2 1 1 2 2 1 2
Donrsquot know 2 2 3 3 2 2 1 2 0 Ch
ina
6 Ch
ina
hart 7 Many young employees think they are not on course to achieve target retirement income Ja
pan
Japa
n Do you think you will achieve this income [your estimated income needed in retirement]
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
I donrsquot know if I am on course to 56 37 57 59 50 39 49 48 48 41 22 68 achieve my retirement income
No I am on course to achieve around one-quarter (25) of my 10 14 9 13 15 14 14 13 10 10 10 7 retirement income
No I am on course to achieve around 12 20 14 11 19 19 18 15 12 11 23 12 half of my retirement income
No I am on course to achieve around three-quarters (75) of my 8 14 7 4 8 15 9 8 6 11 20 5 retirement income
Yes I am on course to achieve my 15 15 13 14 8 13 11 17 25 27 25 8 retirement income
CQ
CQ
39 | The Young Pragmatic and Penniless Generation
Chart 8 Young people in most countries expect to retire before 65 Q At what age do you expect to retire from all paid employment
Net
herl
ands
Ger
man
y
Swed
en
Uni
ted
Kin
gdom
Fran
ce
Spai
n
Pol
and
Hun
gary
Uni
ted
Stat
es
Cana
da
Chin
a
Japa
n
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
40 or under 0 1 1 0 0 1 3 1 5 12
41-50 1 2 3 5 2 2 6 3 9 4 37 9
51-59 4 4 4 6 2 4 11 5 7 10 30 1
60 5 11 8 12 10 13 19 12 12 16 21 27
61-64 2 11 10 2 20 7 4 13 5 3 1 2
65 17 22 44 31 34 32 16 26 26 32 3 25
66-69 42 32 15 9 12 29 20 13 9 9 0 1
70 19 11 10 18 10 5 10 9 13 12 0 6
71+ 5 5 5 9 4 5 5 3 7 5 1 4
Never 2 1 1 2 2 2 6 4 1 0 0
Donrsquot know 2 3 2 5 3 2 8 9 5 5 1 13
Mean 67 65 65 65 64 65 63 64 63 64 53 59
Median 67 65 65 65 65 65 65 65 65 65 55 60
Chart 9 Younger employees feel they donrsquot have money to invest for retirement Q What is the single biggest obstacle to you saving for retirement right now
Net
herl
ands
Ger
man
y
Swed
en
Uni
ted
Kin
gdom
Fran
ce
Spai
n
Pol
and
Hun
gary
Uni
ted
Stat
es
Cana
da
Chin
a
Japa
n
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
The uncertain economic environment 19 8 13 9 13 19 11 14 12 9 29 27
Lack of money to invest 28 41 33 43 47 34 48 55 47 50 6 19
Fear of poor investment returns over the coming years 2 5 10 7 5 6 8 2 6 8 14 6
Complexity of investment products 4 4 4 3 5 3 5 2 12 5
I donrsquot know how to go about investing for the long-term 2 3 10 8 5 5 3 3 6 8 7 9
The fees charged by financial services companies 2 4 4 2 4 3 4 2 3 5 2 5
I canrsquot afford to take financial advice 3 3 6 8 2 4 3 5 3 2 3 2
I donrsquot trust the financial services industry 12 11 8 6 5 10 6 2 2 3 5 4
I donrsquot see the need to save for the long-term 6 1 2 2 3 3 3 1 2 1 4 3
Concerns about unstable currencies currency fluctuations 2 5 1 3 3 3 4 3 4 5 15 2
Other (PLEASE STATE) 3 3 1 1 3 2 4 6 2 2 1
Donrsquot know 17 12 11 7 8 6 3 6 8 6 3 17
The Young Pragmatic and Penniless Generation | 40
Chart 10 More money would incentivize young employees to save for retirement Q Which if any of the following would encourage you to save for retirement
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsMore generous tax breaks on long-term savings and pensions 20 44 30 32 27 23 42 42 33 43 40 32 products
Ger
man
yG
erm
any
Access to financial education so that I am more aware of what 24 6 14 21 16 22 21 12 23 24 43 25 I need to do for myself
Swed
enSw
eden
Access to professional financial advice so that I have personalized
Uni
ted
20 24 23 23 15 21 25 9 22 23 44 13 U
nite
drecommendations on what steps
Kin
gdom
Kin
gdom
I need to take
Simpler investment products that 12 33 19 28 20 Fr
ance
18 27 16 32 28 36 10 Fr
ance
I can understand with less jargon
Better and more frequent information about my retirement 16 28 20 27 27 23
Spai
n20 18 25 31 45 22
Spai
nsavings
Better legal protection in case I am 12 18 13 18 10 24 18 13 13 19 21 6 P
olan
dP
olan
dsold the wrong product
A pay rise 46 54 44 64 55 50 70 72 67 64 53 37
A better retirement plan pension H
unga
ryH
unga
ry27 32 25 33 29 26 42 35 39 44 33 32 match from my employer
Other 4 2 1 1 2 2 3 3 2 U
nite
d3 0
Uni
ted
Stat
esSt
ates
Donrsquot know 17 9 16 10 10 12 3 8 8 5 3 17
Not applicable - I already have 3 3 4 2 2 1 1 1 2 2 3 sufficient savings Ca
nada
Cana
da
Chin
aCh
ina
Chart 11 A majority of younger employees do not have a written plan for retirement Q Which of the following best describes your retirement planning strategy
Japa
n Ja
pan
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
I have a written plan 7 18 10 9 6 8 6 5 13 10 8 4
I have a plan but it is not written 24 47 37 25 23 31 29 31 37 44 55 24
down
I do not have a plan 61 32 51 61 62 55 62 58 45 42 34 61
Donrsquot know 7 3 3 5 8 6 3 6 4 4 3 12
41 | The Young Pragmatic and Penniless Generation
Chart 12 For young employees friends and family are the leading source of retirement savings information Q And which of these sources (of information) is most important to you
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
Bank adviser 6 11 19 5 25 5 7 4 3 17 10 2 N
ethe
rlan
dsN
ethe
rlan
dsProfessional financial adviser 12 22 10 12 10 19 19 22 21 25 19 10
Insurance agent spokesperson 3 10 2 3 1 3 6 2 3 0 3 2 G
erm
any
Ger
man
yInsurance company website 3 1 3 2 4 4 2 2 1 3 1
Personal finance websites online 8 5 7 8 5 4 10 8 12 6 10 8 retirement planning tools Sw
eden
Swed
enPersonal finance media 2 2 2 2 2 6 3 1 2 1 6 2
Government website 7 1 3 6 U
nite
d5 2 3 3 2 3 7 1
Uni
ted
Kin
gdom
Kin
gdom
Bank website 2 3 3 2 1 0 3 2 1 6 3 3
My employer 12 8 4 9 4 7 5 12 8 5 4 1 Fr
ance
Fran
ceAccountant 2 6 4 4 1 3 1 3 5 5 1 3
Lawyer 2 3 1 2 2 8 4 2 1 2 2 0 Sp
ain
Spai
nFriends and family 21 22 30 28 24 26 18 24 26 20 25 24
None of these P
olan
dP
olan
dNot applicable 21 7 16 18 19 13 17 15 14 9 5 41
Hun
gary
Hun
gary
Chart 13 Most young workers feel their employer should provide some kind of pension Q In the future what if anything should employers do to help people plan for retirement
Uni
ted
Uni
ted
Stat
esSt
ates
Cana
daCa
nada
Chin
aCh
ina
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 Ja
pan
Japa
n Employers should be required to 24 43 20 40 21 26 20 28 37 34 20 30 contribute to workersrsquo pensions
Employers should be required to make a pension available but not to 12 13 7 17 20 15 15 4 11 14 22 5 contribute into it
Employers should not be required to provide pensions but should 15 9 12 8 9 8 11 6 11 9 9 11 provide information on how to plan for retirement
Employers should provide a range of flexible benefits and 13 18 18 16 15 27 25 28 21 22 45 12 allow individuals to choose which benefits they actually want
Nothing ndash it should be left to individual employees to take care 2 2 5 1 4 3 3 5 6 5 1 9 of themselves
Nothing ndash it should be left to the government to take care of its 2 5 5 2 5 8 15 14 1 4 0 4 citizens
Donrsquot know 30 10 32 17 27 12 12 15 13 13 3 29
The Young Pragmatic and Penniless Generation | 42
Chart 14 Workplace pensions are relatively low down in young workersrsquo priorities when choosing a job Q How important to you would the following workplace benefits be if you were choosing your next job
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsBasic salary 86 93 88 91 88 92 90 94 90 93 96 94
Holiday entitlement 87 94 89 91 92 94 91 94 93 94 96 91 G
erm
any
Ger
man
yOvertime and bonus pay 86 93 87 88 89 90 89 94 90 91 97 90
Location of workplace 88 91 86 92 89 90 89 92 93 93 92 86 Sw
eden
Swed
enMedical health insurance 73 92 84 65 86 87 88 87 93 94 98 83
Opportunities for career progression 86 91 81 90 90 94 91 94 92 91 96 81 U
nite
dU
nite
dAccess to a workplace retirement 85 85 81 82
Kin
gdom
78 84 80 78 84 86 93 74 K
ingd
omplan with employer contributions
Access to good training provision 85 87 85 88 86 91 85 93 86 90 95 74 Fr
ance
Fran
ceFlexible working hours 79 87 58 86 81 89 81 87 91 91 92 57
Life insurance 72 75 79 69 80 82 Sp
ain
84 80 81 88 93 74 Sp
ain
(death in service benefits)
Phased retirement or other employer programs providing for 74 54 75 71 72 81 76 74 76 81 91 65
Pol
and
Pol
and
a transition into retirement
Ability to work past the normal 68 57 64 65 64 74 72 65 74 76 80 70 retirement age H
unga
ryH
unga
ry
Access to a workplace retirement 62 74 61 68 59 77 61 47 68 74 89 65 plan without employer contributions U
nite
dU
nite
dSt
ates
Stat
esEmployee share plans 50 72 54 65 59 73 61 51 64 73 91 55
Access to creche help with the 67 75 64 56 69 79 75 83 58 69 89 68 cost of childcare Ca
nada
Cana
da
Opportunities for foreign travel 53 54 60 55 50 71 58 66 57 61 79 37
Company car 51 46 45 47 49 63 51 49 36 49 69 Ch
ina
39 Ch
ina
Japa
n Ja
pan
Chart 15 Young workers think the state pension will need to be reformed Q With the cost of government pensions becoming a greater concern as people live longer which if any of the following do you think
the government should undertake
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
The government should reduce the overall cost of state pension 15 33 16 15 16 20 28 22 21 26 30 16 provision by reducing the value of individual pension plans
The government should increase overall funding available for the 12 21 30 22 14 34 19 26 21 18 29 10 state pension through raising taxes
43 | The Young Pragmatic and Penniless Generation
he government should take a alanced approach with some 27 26 12 30 28 23 24 16 34 31 38 41 eductions in individual payments nd some increases in tax
he government should not do nything State pension provision 7 2 12 5 3 4 3 3 5 4 0 5 ill remain perfectly affordable in he future
onrsquot know 38 19 29 29 39 20 26 34 19 21 4 28
Net
herl
ands
art 16 Products which protect against investment risk are the most important to young workers ( interested) Thinking about the types of financial products you could purchase to help provide you with security in retirement on a scale of 1 to 5
how interested are you in the following options G
erm
any
Swed
en
Uni
ted
Kin
gdom
ase 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 Fr
ance
100 100 100 100 100 100 100 100 100 100 100 100
product providing a guaranteed etirement income stream or 75 81 73 76 74 83 78 76 87 85 94 69
Spai
nifetime income in retirement
product which protects my 74 79 73 76 72 82 77 74 84 86 94 65 etirement income against inflation P
olan
d
product which guarantees that I 72 82 73 78 75 81 76 73 86 86 90 67 onrsquot lose my initial investment H
unga
ry product which helps meet the ost of long-term care if I become 74 79 74 77 70 79 76 71 86 85 84 66
Uni
ted
nable to look after myself St
ates
product which protects my capital 71 81 71 76 68 76 77 73 84 83 93 65 rom poor investment returns Ca
nada
product which generates a etirement income and allows 69 78 71 75 68 81 77 72 84 86 94 70 e to take a lump sum from the
Chin
anvestment should I need to
product where the annual 66 78 68 75 72 79 77 70 85 86 87 64 anagement charges are kept low Ja
pan
product which enables me to eep some control over how my 71 73 70 75 72 80 75 69 88 85 91 63 avings are invested during my etirement
product which manages the sset allocation so that I am never 68 70 67 73 66 76 71 67 80 83 95 60 xposed to a level of risk Irsquom not omfortable with
product which continues to rovide a retirement income to my 74 78 71 75 73 81 79 73 86 82 94 60 pouse in the event that I die first
product which protects my family gainst having to pay estate taxes 73 76 71 74 75 81 75 69 82 82 89 56 hen I die
product which locks in investment 72 71 63 73 64 71 59 56 81 84 89 61 eturns during the good years
Tbra
Tawt
D
ChQ
B
Arl
Ar
Ad
Acu
Af
Armi
Am
Aksr
Aaec
Aps
Aaw
Ar
The Young Pragmatic and Penniless Generation | 44
Chart 10 Many young employees do not think that they are on course to achieve target retirement income Q Do you think you will achieve this income [your estimated income needed in retirement]
Base 20-29 year olds
Yes I am on course to achieve my retirement
income
16
47
12
16
10
I donrsquot know if I am on course to achieve my
retirement income
No I am on course to achieve around
one-quarter (25) of
No I am on course to achieve around half of my
retirement income
No I am on course to achieve around
three-quarters (75) of my retirement income
532
China
586
Japan
United S
tate
s
628
Poland
635
Canad
a
636
Hunga
r
638
y
Fran
ce
645 647
Spain
Sweden
649
United K
ingdom
651
Germ
any
653
Nether
lands
666
my retirement income
When will young people retire Media reports about the need to raise the age of retirement appear to have influenced younger employees Fully 44 of 20-29 year
olds do not expect to be able to choose their retirement date although the younger generation do expect to retire at a similar age
to older employees 63 This varies considerable by country In the Netherlands young employees expect to retire eight years later
than those in Japan Some countries such as China and Japan have surprisingly low expected retirement ages suggesting that young
employees may benefit from having a better understanding of when government or workplace retirement benefits kick in
Chart 11 Young people in most countries expect to retire before 65 Q At what age do you expect to retire from all paid employment
Base 20-29 year olds
Despite expecting to retire at the same age as their parents younger employees are more open to a transition into retirement
reflecting their more flexible outlook toward work Around half (51) are happy to change the way they work in some way as they move
into retirement Just 8 expect to keep working as they do currently
17 | The Young Pragmatic and Penniless Generation
Part 3 What is holding young employees back Insights into what young employees feel is holding them back from saving or saving more can be used to encourage younger people to adopt more positive savings behaviors This chapter explores the attitudes of young employees toward the financial obstacles they face and asks what actions they have taken in preparation for retirement The findings reveal that while the majority lacks adequate planning for their retirement needs financial shortcomings are only part of the stor y Spending preferences play a key role in the savings gap of advanced economies
The Young Pragmatic and Penniless Generation | 18
Lack of money to invest 37
16 The uncertain economic environment
7 Fear of poor investment returns over the coming years
6 I donrsquot trust the financial services industry
6 I donrsquot know how to go about investing for the long-term
4 oncerns about unstable currencies currency fluctuations
4 Complexity of investment products
4 I canrsquot afford to take financial advice
3 The fees charged by financial services companies
3 I donrsquot see the need to save for the long-term
Other 2
Donrsquot know 8
A pay rise
More generous tax breaks on long-term savings and pensions products
A better retirement plan pension match from my employer
Better and more frequent information about my retirement savings
Simpler investment products that I can understand with less jargon
Access to professional financial advice so that I have personalized recommendations on what steps I need to take
Access to financial education so that I am more aware of what I need to do for myself
Better legal protection in case I am sold the wrong product
Other
Not applicable - I already have sufficient savings
Donrsquot know
Obstacles and incentives to saving
Chart 12 Younger employees feel they donrsquot have money to invest for retirement Q What is the single biggest obstacle to you saving for retirement right now
Base 20-29 year olds
C
What is the single biggest obstacle preventing twentysomethings that they rank pressing and desirable life goals such as marriage
m saving for retirement Not having enough money to invest starting a family vacations and other leisure activities above the
top of the list cited by over a third (37) although this figure need to plan for retirement This suggests the savings gap is
ops to just 6 in the emerging market of China where mean preference-driven
omes are the lowest by far ($18000) suggesting that lack of
sh may be partly a state of mind Young employees in China The biggest obstacle to retirement savings cited by one-eighth
actually more worried about local concerns such as economic (13) of respondents is either not knowing how to invest for the
certainty (29) and currency instability (15) Behavioral long-term or the complexity of investment products charges and
ance has an impact too with the way young employees frame fees Ready solutions to this include improving young employeesrsquo
eir financial priorities creating its own obstacles to saving financial literacy about retirement planning and creating easier
many as 57 of 20-29 year olds believe that saving for access to professional financial advice
tirement is important but not a current priority suggesting
fro
is
dr
inc
ca
are
un
fin
th
As
re
19 | The Young Pragmatic and Penniless Generation
Chart 13 More money would incentivize young employees to save for retirement Q Which if any of the following would encourage you to save for retirement
Base 20-29 year olds
57 A pay rise
More generous tax breaks on long-term savings and pensions products
34
A better retirement plan pension match from my employer
33
Better and more frequent information about my retirement savings 26
Simpler investment products that I can understand with less jargon 24
Access to professional financial advice so that I have personalized recommendations on what steps I need to take 23
Access to financial education so that I am more aware of what I need to do for myself 22
Better legal protection in case I am sold the wrong product 16
Other 2
Not applicable - I already have sufficient savings 2
Donrsquot know 10
Chart 14 Very few younger employees have a written plan for retirement Q Which of the following best describes your retirement planning strategy
Base 20-29 year olds
5 Donrsquot know I have a
written plan
8
34 I have a plan but it is not
52 written down
I do not have a plan
Turning to incentives greater remuneration predictably tops a list Retirement planning of what would encourage 20-29 year olds to save for retirement Retirement planning is essential to adequate retirement saving
More tellingly a third (33) would like their employer to provide although it is somewhat lacking in todayrsquos younger employees
a better retirement plan into which both parties contribute Over half (52) have no retirement planning strategy at all
Better information and simple products would also help more and only 8 have noted down their retirement strategy
people to save A quarter (26) would be encouraged to save by
better and more frequent information about retirement savings Nevertheless the respondents polled believe that the current
while a similar number (24) want simple investment products global economy makes retirement planning increasingly
that are easy to understand As with the previous question a important ndash 71 agreed with this statement It is clear from this
lack of investment knowledge and the complexity of investment that young people between the ages of 20 and 29 do not lack
products are revealed as obstacles to savings the will to save they lack the opportunity
The Young Pragmatic and Penniless Generation | 20
Part 4 Creating the right conditions for young employees to save How may young employeesrsquo obstacles to saving be overcome For retirement readiness this will be a defining question of the early twenty-first centur y ndash and an extremely challenging one given the number of serious issues affecting younger employeesrsquo finances What was learned in the previous chapter about encouraging young employees to save is a start This chapter examines which areas and triggers to saving can be unlocked and whether government employer or individual should take most responsibility
21 | The Young Pragmatic and Penniless Generation
Friends and family
Professional financial adviser
17
24
Bank adviser 9
Personal finance websites online retirement planning tools
My employer
Government website
4
8
7
Insurance agent spokesperson
Accountant
3
3
Personal finance media 3
Lawyer
Bank website
3
2
Insurance company website
Donrsquot know
2
15
Information and advice on retirement saving strong theme revealed by our findings is that younger This finding is remarkably consistent across the countries
mployees want more information on savings products and sur veyed despite significant differences in market makeup
etter access to advice The largest share 24 (compared although some differences exist For instance a quar ter
o 17 for all employees) finds friends and family to be the (25) of young employees in France turn to bank advisers
ost important source of advice followed by professional for financial information nearly triple the number among all
dvisers (17) and bank advisers (9) That young employees young people (9)
urn to friends and family first suggests an unmet need for
rofessional financial advice This is both a challenge and an
pportunity for the financial ser vices sector
hart 15 For young employees friends and family are the leading source of retirement savings information Which of these sources (of information) is most important to you
ase 20-29 year olds
A
e
b
t
m
a
t
p
o
CQ
B
What is the role of the workplace in retirement planning Does this influence what retirement benefits younger
In response to shifting employment patterns todayrsquos younger employees expect from their workplace Certainly a majority
employees are less loyal to their employers than older workers favor workplace retirement plans with 61 believing that these
Fully 39 of 20-29 year olds are planning to look for a new job should be a fundamental part of pay (although this is lower
in the next 12 months compared to 29 of all workers and than for employees overall) and just 4 feel that retirement
31 frequently think about quitting their jobs Strikingly while planning should be left entirely to individuals
53 of all workers plan to stay with their current employer
until retirement just 37 of 20-29 year olds say this However there is evidence of a slight shift in perceptions
Younger workers are less likely to want workplace retirement
Doubtless much of this is because younger workers are more plans over other factors Of those who want employer
mobile and have more opportunities Another trigger to lower retirement plan contributions only 46 wanted this even if
employer loyalty may be the expectation of holding more jobs it reduced benefits and 35 (compared to 43 of all workers)
and even pursuing multiple careers over a working lifetime if it cut jobs
The Young Pragmatic and Penniless Generation | 22
Donrsquot know Employers should be
required to contribute to workersrsquo pensions
5 Nothing ndash it should be left to the government to take 18
care of its citizens 28
4 Nothing ndash it should be left to individual employees to
take care of themselves
13
22
Employers should provide a range of flexible benefits
and allow individuals to choose which benefits they
actually want
10 Employers should
be required to make a pension available but not
to contribute into it
Employers should not be required to provide pensions but should
provide information on how to plan for retirement
Chart 16 Most young workers feel that their employer should provide some kind of pension Q In the future what if anything should employers do to help people plan for retirement
Base 20-29 year olds
Are other workplace benefits more important Younger workers were asked to rate the importance of various workplace benefits The results reveal how highly they value the
elements of their compensation package Chart 17 shows that 87 of young employees believe a workplace retirement plan with
employer contributions would be an important factor when choosing their next job While retirement may be decades away for
twentysomethings 80 believe programs provide for a phased retirement are important
23 | The Young Pragmatic and Penniless Generation
Basic salary 94
93 Holiday entitlement
91 Overtime and bonus pay
91 Location of workplace
88 Medical health insurance
87 Opportunities for career progression
Access to a workplace retirement plan with employer contributions 87
Access to good training provision 86
Flexible working hours 85
Life insurance (death in service benefits) 81
Phased retirement or other employer programs providing for a transition into retirement 80
Ability to work past the normal retirement age 70
Access to a workplace retirement plan without employer contributions
67
Employee stock plans 65
Access to creche help with the cost of childcare 59
Opportunities for foreign travel 50
Company car 43
Chart 17 Workplace retirement plans are a relatively low priority for younger workers when choosing a job How important to you would the following workplace benefits be if you were choosing your next job
ase 20-29 year olds
Q
B
Regarding workplace benefits provided by employers today considered just enough to fulfill basic needs and in China a
young employees are about as likely as all workers to be offered fully formed nationwide retirement system is still some way off
retirement tools such as annual plan statements and online The future shape and affordability of these plans is debated in
tools from their employer though it is concerning that 24 do all of the sur vey countries to var ying degrees
not know if such tools are available or not Those provided are
considered helpful Younger workersrsquo views on reform are important because
changes to government retirement benefits are more likely
The role of government to affect them than any other part of the working population
The generosity of government retirement benefits varies The main concern cited by 57 is of facing less generous
considerably in the countries sur veyed In some countries such government retirement benefits than those enjoyed by their
as France government benefits are the primar y mechanism parentsrsquo generation
for funding retirement while in the United Kingdom they are
The Young Pragmatic and Penniless Generation | 24
The government should reduce the overall cost of state pension provision by
reducing the value of Donrsquot know individual pension plans
25 22
4 The government should not do anything State pension provision will
remain perfectly affordable in the future
28
21 The government should increase overall funding
available for the state pension through
raising taxes
The government should take a balanced approach with some reductions in individual payments and
some increases in tax
Chart 18 Young workers think that the government retirement system will need to be reformed Q With the cost of government retirement benefits becoming a greater concern as people live longer which
if any of the following do you think the government should undertake
Base 20-29 year olds
The younger generation believes that the government cannot What do young employees look for in a retirement product continue to provide as it does now ndash just 4 think government The sur vey findings show that young employees have
benefits will remain affordable to society However there is no reser vations about employer and government retirement
consensus on what governments should do to reform retirement benefits So what then do they want from a private savings
plan systems Over a fifth (22) think retirement entitlements product The savings product feature most valued by younger
should be cut just over a fifth (21) think governments should workers is protection against investment risk (Char t 19)
raise taxes and more than a quarter (28) think a mixture of This may be in the form of no loss of initial investment a
the two is the best solution Another quarter admits that they guaranteed income stream or protection against inflation
donrsquot know what should be done This is reasonable ndash the initial investment of those farthest
from retirement is most at risk However less consideration
is given to savings grow th through investment returns This
suggests that there is an oppor tunity to educate young
workers about the trade-off between returns and risk
management and what they stand to gain
25 | The Young Pragmatic and Penniless Generation
Chart 19 Products which protect against investment risk are the most important to young workers ( interested) Q Thinking about the types of financial products you could purchase to help provide you with security in retirement on a scale of 1 to 5
how interested are you in the following options
Base 20-29 year olds
A product providing a guaranteed retirement income stream or lifetime income in retirement 82
A product which protects my retirement income against inflation 81
A product which guarantees that I donrsquot lose my initial investment 81
A product which helps meet the cost of long-term care if I become unable to look after myself 80
A product which protects my capital from poor investment returns 79
A product which generates a retirement income and allows me to take a lump sum from the investment should I need to 79
A product where the annual management charges are kept low 78
A product which enables me to keep some control over how my savings are invested during my retirement 77
A product which manages the asset allocation so that I am never exposed to a level of risk Irsquom not comfortable with 76
A product which continues to provide a retirement income to my spouse in the event that I die first 75
A product which protects my family against having to pay estate taxes when I die 72
A product which locks in investment returns during the good years 70
The lsquodefined ambitionrsquo retirement system in This removes some of the disadvantages of leaving
the Netherlands a sustainable retirement solution retirement liabilities exclusively up to employers
for young workers (defined benefit) or employees (defined contribution)
In the Netherlands as elsewhere young workers are faced In the Netherlands this is likely to involve legislation which
with an increasing retirement age decreasing government lets retirement funds automatically adjust pay-outs and
suppor t for retirement and declining traditional defined retirement age as life expectancy changes xii
benefit employer retirement plans Reforms proposed
by the Dutch may show a way for ward for all mature and This model has garnered interest elsewhere In the
aging economies United Kingdom Pensions Minister Steve Webb expressed
interest on a more limited scale with a government
rsquoDefined ambitionrsquo proposes that risks are not taken on fully guarantee for a minimum rate of return for defined
by either employer or employee but are shared contribution retirement plans
The Young Pragmatic and Penniless Generation | 26
Recommendations Enabling young workers to save The studyrsquos findings reveal that the majority of young workers (66) are either saving consistently or aspire to start saving but face challenges including debt low pay and funding for significant life events and generational changes to the economic landscape and government and employer support If young people are to achieve a prosperous retirement their willingness to save should be met with better opportunities to save Here is what can be done by employers governments and young people themselves to address retirement planning concerns for younger adults
27 | The Young Pragmatic and Penniless Generation
Individuals Employers and governments
Determine how much income you need in retirement Auto-enroll employees into a workplace retirement plan Young people accept the need to save for retirement but donrsquot If an auto-enrollment workplace retirement plan is feasible
know how to act on that need They can become more retirement this can play a major role in getting young workers saving early
savvy simply by talking to friends and family (as do 24 of and regularly Combined with auto-escalation (the automatic
our respondents already) or employers going online to use annual increase in retirement plan contributions) and matching
retirement calculators or reading the personal finance media contributions it can lead to greater retirement readiness
Seek out a financial advisor Provide more flexible savings products through the workplace Young people are faced with life events that make it easy to Not all savings journeys start with a retirement plan particularly
feel overwhelmed by financial priorities in addition to retirement for young people who may think of retirement as lsquotoo far awayrsquo
planning Soliciting advice from a finance professional early in Employers can kick-start the savings habit in younger workers
life (17 of young employees have done so already) helps with by providing flexible easy to access and easy to understand
planning and priorities and making sense of long-term finances savings plans as a more attractive starter option
Start saving now and save consistently Make company retirement plans more portable As with all employees young people will strengthen their Young people move jobs much more often than previous
retirement readiness simply by saving regularly Today only 25 generations of employees so savings like DC retirement plans
of young people always save yet even small regular amounts need to follow employees when they change jobs
will improve retirement readiness over time
Make tax incentives more effective Ask your employer about workplace retirement savings plans All countries encourage long-term savings through tax relief but
and other retirement benefits young people often arenrsquot aware of this or donrsquot understand it
While one third (33) of young people believe that a workplace A more targeted system of tax relief could help provide clearer
retirement savings plan provides a major opportunity to start and simpler signals to younger people about the financial
saving employers often experience difficulties in engaging benefits of long-term saving
younger employees in discussions about retirement planning
The workplace is an important channel for achieving retirement Make better financial education central to the workplace readiness so be sure to max out on any employer contributions retirement offer
Young people who aspire to save may be prevented from
doing so by setting the wrong financial priorities Workplace
retirement education ndash alongside professional advice ndash can help
guide young people toward the right long-term priorities at an
earlier age in life
The Young Pragmatic and Penniless Generation | 28
29 | The Young Pragmatic and Penniless Generation
Glossary
Aegon Retirement Readiness Index (ARRI) c areer average retirement plan The ARRI assesses the relative levels of retirement A type of defined benefit plan that is based on an
preparedness of employees across different countries on a employeersquos average retirement earnings over the duration
scale from 1 to 10 The Index is based on three questions of plan membership Same as average salary plan
covering attitudes and three questions covering behaviors
defined ambition (DA) plan average salary plan A type of retirement plan in which retirement plan risks
A type of defined benefit plan that is based on an are shared between the employer and the employee
employeersquos average retirement earnings over the duration It offers greater certainty to savers around the final value
of plan membership Same as career average plan of their retirement assets than in DC plans and less
cost volatility for employers than with DB plans In the
a nnuity Netherlands Defined Ambition (DA) retirement plans are
A form of contract sold by life insurance companies that being introduced in order to help relieve the pressure on
guarantees a fixed or variable payment to the annuitant employers while still trying to provide employees with a
at some future time usually retirement All capital in the more secure retirement plan The United Kingdom too is
annuity grows tax-deferred looking at DA retirement plans as a solution
auto enrollment defined benefit (DB) plan An employer-sponsored retirement plan in which the An employer-sponsored retirement plan where the amount
employer is able to enroll an employee without that of future benefits an employee will receive from the plan is
employeersquos express authorization The employer determines defined typically by a formula based on salary history and
what percentage of the employeersquos salary or wages is years of service The amount of contributions the employer
contributed to the plan The employee is able to change is required to make will depend on the investment returns
this percentage and can opt out of enrollment in the plan experienced by the plan and the benefits promised
Contrast defined contribution plan
a uto-escalation A feature of a plan which automatically increases the defined contribution (DC) plan percentage of (retirement) funds saved from salary An employer-sponsored retirement plan such as a 401(k)
This feature generally uses a default or standard plan or a 403(b) plan in the United States in which
contribution escalation rate contributions are made to individual participant accounts
Depending on the type of DC plan contributions may be
B aby Boomers made by the employee the employer or both
A term used to refer to people generally born between
the end of World War II in 1945 and the mid 1960s The employeersquos benefits at retirement or termination of
Other generations Silent Generation - the generation born employment are based on the employee and employer
between 1925 and 1945 Generation X - the generation contributions and earnings and losses on those
born between 1965 and 1979 Millennials or Generation contributions See also 401(k) and 403(b) plan
Y - the generation born between 1980 and 2000 and often Contrast defined benefit plan
classified as the children of Baby Boomers
The Young Pragmatic and Penniless Generation | 30
401(k) plan An employer sponsored retirement plan that enables
employees to make tax-deferred contributions from their
salaries to the plan
403(b) plan An employer-sponsored defined contribution plan that
enables employees of universities public schools and
non-profit organizations to make tax-deferred contributions
from their salaries to the plan
final salary plan A type of defined benefit plan in which retirement
benefits are based on final retirement salary in the years
immediately before retirement benefits are received
Millennials A term used to refer to the people born from about 1980
to 2000 brought up using digital technology They are
often classified as the children of Baby Boomers
r etirement (or pension) plan Provides replacement for salary when a person is no
longer working due to retirement In the case of a defined
benefit retirement plan the employer or union contributes
to the plan which pays a predetermined benefit for the
rest of the employeersquos life based on length of service and
salary Payments may be made either directly or through
an annuity Retirement plan payments are taxable income
to recipients in the year received The employer or union
has fiduciary responsibility to invest the retirement plan
funds in stocks bonds real estate and other assets earn
a satisfactory rate of return and make payments to retired
workers Retirement plan funds holding trillions of dollars
are one of the largest investment forces in the stock
bond and real estate markets If the employer defaults in
the United States retirement plan payments are usually
guaranteed by the Pension Benefit Guaranty Corporation
(PBGC)
variable annuities (VA) An insurance contract in which the insurance company
guarantees a minimum payment at the end of the
accumulation period The payments may vary depending
on the financial performance of the managed portfolio
31 | The Young Pragmatic and Penniless Generation
About Aegon Transamerica Center for Retirement Studiesreg and Cicero Consulting
Aegon Transamerica Center Aegon is an international life insurance pensions and asset reg management company with businesses in over 20 markets for Retirement Studies in the Americas Europe and Asia Aegon companies employ The Transamerica Center for Retirement Studiesreg (TCRS) is
around 24000 people and serve millions of customers a division of the Transamerica Institute a nonprofit private
worldwide foundation TCRS is dedicated to educating the public on
wwwaegoncom emerging trends surrounding retirement security in the
United States TCRSrsquo research emphasizes employer-sponsored
In 2010 Aegon became a founding member of the Global retirement plans issues faced by small to mid-sized companies
Coalition on Aging which seeks to raise awareness of aging and their employees and the implications of legislative and
issues among policymakers and the general public A major aim regulatory changes Transamerica Institute is funded by
of the coalition is to transform the way we think and speak contributions from Transamerica Life Insurance Company and
about aging replacing the familiar rhetoric of lsquoproblemsrsquo with its affiliates and may receive funds from unaffiliated third-
a more positive discussion of lsquopossibilitiesrsquo and lsquoopportunitiesrsquo parties For more information about TCRS please refer to
wwwglobalcoalitiononagingcom wwwtransamericacenterorg
Cicero Consulting A leading consultancy firm serving the banking insurance and
asset management sector Cicero specializes in public policy
and communications consulting as well as global thought
leadership and independent market research Cicero was
established in 2001 and now operates from offices in London
Brussels Washington and Singapore As a market leader in
pensions and retirement research Cicero designed
and analyzed the research and contributed to the report
wwwcicero-groupcom
The Young Pragmatic and Penniless Generation | 32
Marta acebo Mark Green Patricia Plas
Paula alvarez douGlas henck scott roane
Frits bart wendel hoFMan thurstan robinson
Grace basile
lynette belFry
andrew berwick
Frans van der horst
tatsuo kai
herMan kaPPelle
Patti rowey
sarah russell
Joost van schaGen
robin boon Gaacutebor kePecs dick schiethart
bert-JaaP brons Marco keiM erik schouten
douG brooks
libby buet
kent callahan
JaiMe kirkPatrick
bas knol
roGer koch
anGela seyMour Jackson
kate sMith
renske stoker
Jeanne de cervens
dana chen
Peter kunkel
alexander kuiPers
eyleen sun
MartiJn tans
arkadiusz chMurzynski
heidi cho
brian lewis
Mike linder
GreG tucker
Mark twiGG
siMon clow siMon luke catherine wanG
robert colliGnon Jason Ma Marc van weede
catherine collinson GrzeGorz Mathea tiM willaert
wendy daniels
Michel denizot
edit drevenka
Paul Middleton
takaoh MiyaGawa
david Moulton
daniel wriGht
alex wynaendts
MacieJ zaPala
Jan driessen
kelly Fu
adrian Grace
Mark Mullin
Marcelle noltenius
stiG nybo
Peacuteter zatykoacute
vicky zeldin
Disclaimer This repor t contains general information only and does
not constitute a solicitation or offer No rights can be
derived from this repor t Aegon its par tners and any of
their affiliates or employees do not guarantee warrant
or represent the accuracy or completeness of the
information contained in the repor t
Acknowledgements
33 | The Young Pragmatic and Penniless Generation
References and notes i For a comparison of different retirement systems see lsquoPensions at a Glance 2011rsquo OECD 2011 ii As the survey was carried out online the survey results in China are based toward people living in urban areas iii ldquoPensions Marketsrdquo TheCityUK March 2013 p9 iv Global Employment Trends for Youth 2013 A generation at risk International Labour Organisation 2013 p2 v Eurostat July 2013 vi OECD Employment and Labour Markets Key Tables from OECD No 2 2012 vii The Federal Reserve Bank of New York 2012 Quarterly Report on Household Debt March 29 2013 viii World Bank ix lsquoWorld-class povertyrsquo The Economist February 27 2013
httpwwweconomistcomblogsanalects201302chinas-poor x lsquoThe Chinese slow down in char tsrsquo The Economist July 15 2013 xi lsquoChina rsquos welfare system difficult inflexible and blatantly unfairrsquo The Guardian April 23 2013
httpwwwtheguardiancomglobal-development2013apr23china-welfare-system-inflexible-unfair xii lsquo The Dutch experience with Defined Ambition pensions and the impact on companiesrsquo Aegon Global Pensions March 12 2013
httpwwwaegonglobalpensionscomenHomePublicationsNews-archiveNewsThe-Dutch-experience-with-Defined
Ambition-pensions-and-what-that-may-mean-for-companies-in-the-Netherlands-and-the-UK
shy
The Young Pragmatic and Penniless Generation | 34
Contact information HE ADQUARTER S
Aegon NV
PO Box 85
2501 CB The Hague
Telephone +31 70 344 32 10
w w waegoncom
MEDIA REL ATIONS
Telephone +31 70 344 89 56
Email gcc-iraegoncom
Countr y Index score
Germany 548
China 541
Canada 524
United States 519
The Netherlands 488
United Kingdom 486
Sweden 483
France 475
Hungar y 473
Poland 463
Spain 440
Japan 430
Total 489
Appendix 1 Aegon Retirement Readiness Index (ARRI) - technical note
Aegon Retirement Readiness Index (ARRI)-technical note 2013 Weightings (2012 in brackets) A sample of 12000 pre and post retirees was drawn from 1 Personal responsibilit y 20 (30)
twelve countries Of these 10800 (90) were pre-retirees 2 Level of awareness 30 (35)
and these were chosen for fur ther analysis of their plans 3 Financial capability Understanding 30 (25)
for retirement The Index that was developed forms an 4 Retirement planning 50 (50)
assessment of how well an individual perceives the adequacy 5 Financial preparedness 60 (60)
of his her own finances and financial awareness specifically 6 Income replacement 35 (35)
for addressing his retirement needs
Note that the weights devised to show the relative
The lsquotargetrsquo for the Index impor tance of each question in calculating the Index add to
The question on current savings activity was designated as the 225 These were then re-scaled so that a final scale of 1 to
target question (dependent variable) for predicting the level of 10 was calculated
preparedness for retirement Responses to this question were
then correlated with each of the six key questions (variables) Final scores by country below to understand which were driving the activity These weightings were multiplied by the actual scores for each
This was done because it was not felt to be correct to give respondent for each of the six Index questions and aggregated
each of the six variables described below an equal weight as to obtain a provisional score This was then adjusted to
they appeared to have quite different relationships to the give countr y scores out of 1 to 10 (A score of 1 to 10 had
target question sufficient differentiation to be used as the scale for analysis)
1 Personal responsibilit y for income in retirement
2 Level of awareness of need to plan for retirement
3 F inancial capability Understanding of financial matters
regarding plans for retirement
4 Retirement planning Level of development of plans
5 Financial preparedness for retirement
6 Income replacement Level of projected income replacement
The weighting To estimate the statistical significance of the decline in overall
scores in this yearrsquos Index is theoretically incalculable
Two things have changed from 2012 to 2013
1 C anada and China have joined the sample
2 The new countries have thus influenced the weights of
emphasis placed on the 6 variables used to calculate
the score hence the weights attached to the complex
calculation have changed
However it is noticeable that for countries which were sampled
in both time periods the mean scores for the six individual
variables have almost invariably declined and on average more
than half of them have shown a significant level of decline
In particular the question lsquoDo you think you will achieve this
incomersquo has for all countries shown a significant level of
decline We thus hypothesize that the comparative results
show a significant decline
The Young Pragmatic and Penniless Generation | 36
Net
herl
ands
Net
herl
ands
Net
herl
ands
Ger
man
yG
erm
any
Ger
man
yBase 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
Better off 7 4 23 Sw
eden
Swed
en11 5 7 8 3 11 14 50 5
Swed
en
About the same 19 18 27 23 8 19 18 13 29 29 24 21 U
ntie
dU
ntie
dU
nite
d Worse off 66 74 41 58 79 69 71 76 51 47 21 55
Kin
gdom
Kin
gdom
Kin
gdom
Donrsquot know 9 3 9 9 9 4 4 8 9 10 6 19
Fran
ceFr
ance
Fran
ce
Chart 2 Education of 20 ndash 29 year olds by country Q Please choose from the following list the highest level of educational or professional qualification you have
Spai
nSp
ain
Spa
in
Pol
and
Pol
and
Pol
and
Hun
gary
Hun
gary
Hun
gar y
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
dU
nite
d 100 100 100 100 100 100 100 100 100
Stat
es100 100 100
Stat
esSt
ates
Less than high school graduate 2 44 6 14 1 3 2 7 1 3 Ca
nada
Cana
daC
anad
aHigh school graduate 11 33 53 23 22 22 4 41 14 21 1 2
Some college or trade school 46 2 9 9 9 19 37 14 28 20 4 33 Ch
ina
Chin
aC
hina
College degree University degree 31 15 27 30 41 43 21 33 50 46 9 57
Postgraduate degree or 8 3 3 23 25 11 36 1 8 9 80 6 qualification Ja
pan
Japa
n Ja
pan
Other 2 4 1 1 1 2 0 5 0 6 2
None 0 1 1 0 1 0 0
NET Less than undergrad degree 61 82 70 47 34 46 43 66 42 45 11 37
NET Undergrad degree or higher 39 18 30 53 66 54 57 34 58 55 89 63
Chart 3 Aegon Retirement Readiness Index scores for young employees by country
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
NET Low Index (0-5) 80 64 79 81 85 78 81 73 65 61 61 87
NET Medium Index (6-7) 15 30 18 15 14 21 17 23 25 31 31 12
NET High Index (8-10) 4 6 3 3 1 2 2 4 10 8 7 1
Appendix 2 Country comparisons Chart 1 The majority of young employees believe that they will be worse off in retirement compared to their parents Q Do you think that future generations of retirees will be better off or worse off than those currently in retirement
37 | The Young Pragmatic and Penniless Generation
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsI always make sure that 27 34 27 26 17 14 19 22 35 33 32 20 I am saving for retirement
I only save for retirement G
erm
any
Ger
man
y21 27 20 13 17 21 16 6 17 24 20 24 occasionally from time to time
I am not saving for retirement now 6 11 8 11 5 15 9 4 10 8 9 5 although I have in the past Sw
eden
Swed
en
I am not saving for retirement 35 23 34 46 53 40 49 54 36 33 38 46 though I do intend to U
nite
dU
ntie
dK
ingd
omK
ingd
om I have never saved for retirement and 11 6 10 5 8 10 6 13 3 2 1 6 donrsquot intend to
Fran
ceFr
ance
Chart 5 Younger people are more likely not to be using any means of retirement savings Sp
ain
Spai
nQ Which financial means if any are you currently using to prepare for your retirement
Pol
and
Pol
and
only asked in Germany only asked in Spain
Hun
gary
Hun
gary
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
dSt
ates
Stat
es100 100 100 100 100 100 100 100 100 100 100 100
Defined benefit plan 16 10 25 29 15 3 76 11 20 13 5 Ca
nada
Cana
daDefined contribution plan 28 10 17 19 19 14 10 23 40 7 3
Private pension 8 18 14 10 5 9 4 13 12 40 66 4 Ch
ina
Chin
a Government pension social security 12 43 14 21 8 7 4 18 27 33 71 35
Stocks 5 12 14 7 4 17 7 2 13 10 23 9
Bonds 1 8 5 6 2 16 4 2 8 13 14 3 Ja
pan
Japa
n
Mutual funds 2 14 23 4 2 10 3 4 7 16 9 6
Investment insurances (annuities) 2 3 2 3 2 9 4 5 2 4 6 1
Savings accounts 23 37 38 25 23 6 29 15 36 37 65 36
Investment property 2 10 6 7 9 2 5 2 5 11 18 1
Employee stock purchase 1 1 1 4 1 29 0 4 1 7 1
My home 10 5 8 7 7 8 4 6 6 14 30 1
Reverse mortgage 1 4 2 4
My business 2 1 3 2 2 4 1 1 2 4 12 1
Inheritance 3 11 7 11 7 9 9 8 7 9 6 2
Annuities 1 15 2 2 1 4 3 2 1 2 8
Long-term care insurance 2 1 3 2 9 5 1 6 4 7 1
Life insurance 6 11 8 8 14 3 18 15 19 18 36 17
Unterstuumltzungskasse aus 2 Eigenmitteln finanziert
Unterstuumltzungskasse vom 2 Arbeitgeber finanziert
Chart 4 Younger employees are much more likely to aspire to save for retirement Which of the following best explains your approach to saving for retirement This can include money you contribute to any long-term
investment including pensions stocks and shares investment-linked insurances property etc
Q
The Young Pragmatic and Penniless Generation | 38
Plan de empleo mixto 2 (combinacioacuten de las dos anteriores)
Other 1 6 4 0 1 2 2 3 2 2 3 3
None nothing 8 14 12 23 25 31 6 27 21 17 3 24
Donrsquot know 29 6 17 13 19 8 4 9 7 7 0 9
hart 6 The younger generation has more negative associations of retirement Which if any of the following words do you most associate with retirement
Net
herl
ands
Net
herl
ands
Ger
man
yG
erm
any
Swed
enSw
eden
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
d100 100 100 100 100 100 100 100 100 100 100 100
Kin
gdom
Kin
gdom
Freedom 35 32 36 39 19 26 11 20 35 40 37 33
Opportunity 7 27 25 18 4 8 9 10 17 16 9 16 Fr
ance
Fran
ceLeisure 58 48 36 41 23 24 43 32 50 50 55 6
Excitement 2 5 3 8 2 6 1 2 17 17 4 3 Sp
ain
Spai
nPoverty 11 26 23 11 26 14 37 44 7 5 6 20
Insecurity 34 24 18 16 20 18 35 56 10 9 18 44 P
olan
dP
olan
dLoneliness 4 10 17 16 12 7 11 8 5 9 20 12
Ill health 2 19 7 14 15 9 49 23 6 6 29 11 H
unga
ryH
unga
ryDependent on others 11 11 5 18 14 8 18 19 14 6 11 4
Tired 3 4 8 10 14 10 17 6 7 7 13 19 U
nite
dU
nite
dFar away 38 19 25 21 61 32 2 13 33
Stat
es33 14 22
Stat
es
Boredom 14 16 6 12 16 12 15 8 12 12 16 17 Ca
nada
Cana
daEnjoyment 21 16 17 23 14 29 5 3 37 37 35 15
None of the above 0 1 1 2 0 2 1 1 2 2 1 2
Donrsquot know 2 2 3 3 2 2 1 2 0 Ch
ina
6 Ch
ina
hart 7 Many young employees think they are not on course to achieve target retirement income Ja
pan
Japa
n Do you think you will achieve this income [your estimated income needed in retirement]
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
I donrsquot know if I am on course to 56 37 57 59 50 39 49 48 48 41 22 68 achieve my retirement income
No I am on course to achieve around one-quarter (25) of my 10 14 9 13 15 14 14 13 10 10 10 7 retirement income
No I am on course to achieve around 12 20 14 11 19 19 18 15 12 11 23 12 half of my retirement income
No I am on course to achieve around three-quarters (75) of my 8 14 7 4 8 15 9 8 6 11 20 5 retirement income
Yes I am on course to achieve my 15 15 13 14 8 13 11 17 25 27 25 8 retirement income
CQ
CQ
39 | The Young Pragmatic and Penniless Generation
Chart 8 Young people in most countries expect to retire before 65 Q At what age do you expect to retire from all paid employment
Net
herl
ands
Ger
man
y
Swed
en
Uni
ted
Kin
gdom
Fran
ce
Spai
n
Pol
and
Hun
gary
Uni
ted
Stat
es
Cana
da
Chin
a
Japa
n
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
40 or under 0 1 1 0 0 1 3 1 5 12
41-50 1 2 3 5 2 2 6 3 9 4 37 9
51-59 4 4 4 6 2 4 11 5 7 10 30 1
60 5 11 8 12 10 13 19 12 12 16 21 27
61-64 2 11 10 2 20 7 4 13 5 3 1 2
65 17 22 44 31 34 32 16 26 26 32 3 25
66-69 42 32 15 9 12 29 20 13 9 9 0 1
70 19 11 10 18 10 5 10 9 13 12 0 6
71+ 5 5 5 9 4 5 5 3 7 5 1 4
Never 2 1 1 2 2 2 6 4 1 0 0
Donrsquot know 2 3 2 5 3 2 8 9 5 5 1 13
Mean 67 65 65 65 64 65 63 64 63 64 53 59
Median 67 65 65 65 65 65 65 65 65 65 55 60
Chart 9 Younger employees feel they donrsquot have money to invest for retirement Q What is the single biggest obstacle to you saving for retirement right now
Net
herl
ands
Ger
man
y
Swed
en
Uni
ted
Kin
gdom
Fran
ce
Spai
n
Pol
and
Hun
gary
Uni
ted
Stat
es
Cana
da
Chin
a
Japa
n
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
The uncertain economic environment 19 8 13 9 13 19 11 14 12 9 29 27
Lack of money to invest 28 41 33 43 47 34 48 55 47 50 6 19
Fear of poor investment returns over the coming years 2 5 10 7 5 6 8 2 6 8 14 6
Complexity of investment products 4 4 4 3 5 3 5 2 12 5
I donrsquot know how to go about investing for the long-term 2 3 10 8 5 5 3 3 6 8 7 9
The fees charged by financial services companies 2 4 4 2 4 3 4 2 3 5 2 5
I canrsquot afford to take financial advice 3 3 6 8 2 4 3 5 3 2 3 2
I donrsquot trust the financial services industry 12 11 8 6 5 10 6 2 2 3 5 4
I donrsquot see the need to save for the long-term 6 1 2 2 3 3 3 1 2 1 4 3
Concerns about unstable currencies currency fluctuations 2 5 1 3 3 3 4 3 4 5 15 2
Other (PLEASE STATE) 3 3 1 1 3 2 4 6 2 2 1
Donrsquot know 17 12 11 7 8 6 3 6 8 6 3 17
The Young Pragmatic and Penniless Generation | 40
Chart 10 More money would incentivize young employees to save for retirement Q Which if any of the following would encourage you to save for retirement
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsMore generous tax breaks on long-term savings and pensions 20 44 30 32 27 23 42 42 33 43 40 32 products
Ger
man
yG
erm
any
Access to financial education so that I am more aware of what 24 6 14 21 16 22 21 12 23 24 43 25 I need to do for myself
Swed
enSw
eden
Access to professional financial advice so that I have personalized
Uni
ted
20 24 23 23 15 21 25 9 22 23 44 13 U
nite
drecommendations on what steps
Kin
gdom
Kin
gdom
I need to take
Simpler investment products that 12 33 19 28 20 Fr
ance
18 27 16 32 28 36 10 Fr
ance
I can understand with less jargon
Better and more frequent information about my retirement 16 28 20 27 27 23
Spai
n20 18 25 31 45 22
Spai
nsavings
Better legal protection in case I am 12 18 13 18 10 24 18 13 13 19 21 6 P
olan
dP
olan
dsold the wrong product
A pay rise 46 54 44 64 55 50 70 72 67 64 53 37
A better retirement plan pension H
unga
ryH
unga
ry27 32 25 33 29 26 42 35 39 44 33 32 match from my employer
Other 4 2 1 1 2 2 3 3 2 U
nite
d3 0
Uni
ted
Stat
esSt
ates
Donrsquot know 17 9 16 10 10 12 3 8 8 5 3 17
Not applicable - I already have 3 3 4 2 2 1 1 1 2 2 3 sufficient savings Ca
nada
Cana
da
Chin
aCh
ina
Chart 11 A majority of younger employees do not have a written plan for retirement Q Which of the following best describes your retirement planning strategy
Japa
n Ja
pan
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
I have a written plan 7 18 10 9 6 8 6 5 13 10 8 4
I have a plan but it is not written 24 47 37 25 23 31 29 31 37 44 55 24
down
I do not have a plan 61 32 51 61 62 55 62 58 45 42 34 61
Donrsquot know 7 3 3 5 8 6 3 6 4 4 3 12
41 | The Young Pragmatic and Penniless Generation
Chart 12 For young employees friends and family are the leading source of retirement savings information Q And which of these sources (of information) is most important to you
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
Bank adviser 6 11 19 5 25 5 7 4 3 17 10 2 N
ethe
rlan
dsN
ethe
rlan
dsProfessional financial adviser 12 22 10 12 10 19 19 22 21 25 19 10
Insurance agent spokesperson 3 10 2 3 1 3 6 2 3 0 3 2 G
erm
any
Ger
man
yInsurance company website 3 1 3 2 4 4 2 2 1 3 1
Personal finance websites online 8 5 7 8 5 4 10 8 12 6 10 8 retirement planning tools Sw
eden
Swed
enPersonal finance media 2 2 2 2 2 6 3 1 2 1 6 2
Government website 7 1 3 6 U
nite
d5 2 3 3 2 3 7 1
Uni
ted
Kin
gdom
Kin
gdom
Bank website 2 3 3 2 1 0 3 2 1 6 3 3
My employer 12 8 4 9 4 7 5 12 8 5 4 1 Fr
ance
Fran
ceAccountant 2 6 4 4 1 3 1 3 5 5 1 3
Lawyer 2 3 1 2 2 8 4 2 1 2 2 0 Sp
ain
Spai
nFriends and family 21 22 30 28 24 26 18 24 26 20 25 24
None of these P
olan
dP
olan
dNot applicable 21 7 16 18 19 13 17 15 14 9 5 41
Hun
gary
Hun
gary
Chart 13 Most young workers feel their employer should provide some kind of pension Q In the future what if anything should employers do to help people plan for retirement
Uni
ted
Uni
ted
Stat
esSt
ates
Cana
daCa
nada
Chin
aCh
ina
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 Ja
pan
Japa
n Employers should be required to 24 43 20 40 21 26 20 28 37 34 20 30 contribute to workersrsquo pensions
Employers should be required to make a pension available but not to 12 13 7 17 20 15 15 4 11 14 22 5 contribute into it
Employers should not be required to provide pensions but should 15 9 12 8 9 8 11 6 11 9 9 11 provide information on how to plan for retirement
Employers should provide a range of flexible benefits and 13 18 18 16 15 27 25 28 21 22 45 12 allow individuals to choose which benefits they actually want
Nothing ndash it should be left to individual employees to take care 2 2 5 1 4 3 3 5 6 5 1 9 of themselves
Nothing ndash it should be left to the government to take care of its 2 5 5 2 5 8 15 14 1 4 0 4 citizens
Donrsquot know 30 10 32 17 27 12 12 15 13 13 3 29
The Young Pragmatic and Penniless Generation | 42
Chart 14 Workplace pensions are relatively low down in young workersrsquo priorities when choosing a job Q How important to you would the following workplace benefits be if you were choosing your next job
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsBasic salary 86 93 88 91 88 92 90 94 90 93 96 94
Holiday entitlement 87 94 89 91 92 94 91 94 93 94 96 91 G
erm
any
Ger
man
yOvertime and bonus pay 86 93 87 88 89 90 89 94 90 91 97 90
Location of workplace 88 91 86 92 89 90 89 92 93 93 92 86 Sw
eden
Swed
enMedical health insurance 73 92 84 65 86 87 88 87 93 94 98 83
Opportunities for career progression 86 91 81 90 90 94 91 94 92 91 96 81 U
nite
dU
nite
dAccess to a workplace retirement 85 85 81 82
Kin
gdom
78 84 80 78 84 86 93 74 K
ingd
omplan with employer contributions
Access to good training provision 85 87 85 88 86 91 85 93 86 90 95 74 Fr
ance
Fran
ceFlexible working hours 79 87 58 86 81 89 81 87 91 91 92 57
Life insurance 72 75 79 69 80 82 Sp
ain
84 80 81 88 93 74 Sp
ain
(death in service benefits)
Phased retirement or other employer programs providing for 74 54 75 71 72 81 76 74 76 81 91 65
Pol
and
Pol
and
a transition into retirement
Ability to work past the normal 68 57 64 65 64 74 72 65 74 76 80 70 retirement age H
unga
ryH
unga
ry
Access to a workplace retirement 62 74 61 68 59 77 61 47 68 74 89 65 plan without employer contributions U
nite
dU
nite
dSt
ates
Stat
esEmployee share plans 50 72 54 65 59 73 61 51 64 73 91 55
Access to creche help with the 67 75 64 56 69 79 75 83 58 69 89 68 cost of childcare Ca
nada
Cana
da
Opportunities for foreign travel 53 54 60 55 50 71 58 66 57 61 79 37
Company car 51 46 45 47 49 63 51 49 36 49 69 Ch
ina
39 Ch
ina
Japa
n Ja
pan
Chart 15 Young workers think the state pension will need to be reformed Q With the cost of government pensions becoming a greater concern as people live longer which if any of the following do you think
the government should undertake
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
The government should reduce the overall cost of state pension 15 33 16 15 16 20 28 22 21 26 30 16 provision by reducing the value of individual pension plans
The government should increase overall funding available for the 12 21 30 22 14 34 19 26 21 18 29 10 state pension through raising taxes
43 | The Young Pragmatic and Penniless Generation
he government should take a alanced approach with some 27 26 12 30 28 23 24 16 34 31 38 41 eductions in individual payments nd some increases in tax
he government should not do nything State pension provision 7 2 12 5 3 4 3 3 5 4 0 5 ill remain perfectly affordable in he future
onrsquot know 38 19 29 29 39 20 26 34 19 21 4 28
Net
herl
ands
art 16 Products which protect against investment risk are the most important to young workers ( interested) Thinking about the types of financial products you could purchase to help provide you with security in retirement on a scale of 1 to 5
how interested are you in the following options G
erm
any
Swed
en
Uni
ted
Kin
gdom
ase 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 Fr
ance
100 100 100 100 100 100 100 100 100 100 100 100
product providing a guaranteed etirement income stream or 75 81 73 76 74 83 78 76 87 85 94 69
Spai
nifetime income in retirement
product which protects my 74 79 73 76 72 82 77 74 84 86 94 65 etirement income against inflation P
olan
d
product which guarantees that I 72 82 73 78 75 81 76 73 86 86 90 67 onrsquot lose my initial investment H
unga
ry product which helps meet the ost of long-term care if I become 74 79 74 77 70 79 76 71 86 85 84 66
Uni
ted
nable to look after myself St
ates
product which protects my capital 71 81 71 76 68 76 77 73 84 83 93 65 rom poor investment returns Ca
nada
product which generates a etirement income and allows 69 78 71 75 68 81 77 72 84 86 94 70 e to take a lump sum from the
Chin
anvestment should I need to
product where the annual 66 78 68 75 72 79 77 70 85 86 87 64 anagement charges are kept low Ja
pan
product which enables me to eep some control over how my 71 73 70 75 72 80 75 69 88 85 91 63 avings are invested during my etirement
product which manages the sset allocation so that I am never 68 70 67 73 66 76 71 67 80 83 95 60 xposed to a level of risk Irsquom not omfortable with
product which continues to rovide a retirement income to my 74 78 71 75 73 81 79 73 86 82 94 60 pouse in the event that I die first
product which protects my family gainst having to pay estate taxes 73 76 71 74 75 81 75 69 82 82 89 56 hen I die
product which locks in investment 72 71 63 73 64 71 59 56 81 84 89 61 eturns during the good years
Tbra
Tawt
D
ChQ
B
Arl
Ar
Ad
Acu
Af
Armi
Am
Aksr
Aaec
Aps
Aaw
Ar
The Young Pragmatic and Penniless Generation | 44
Part 3 What is holding young employees back Insights into what young employees feel is holding them back from saving or saving more can be used to encourage younger people to adopt more positive savings behaviors This chapter explores the attitudes of young employees toward the financial obstacles they face and asks what actions they have taken in preparation for retirement The findings reveal that while the majority lacks adequate planning for their retirement needs financial shortcomings are only part of the stor y Spending preferences play a key role in the savings gap of advanced economies
The Young Pragmatic and Penniless Generation | 18
Lack of money to invest 37
16 The uncertain economic environment
7 Fear of poor investment returns over the coming years
6 I donrsquot trust the financial services industry
6 I donrsquot know how to go about investing for the long-term
4 oncerns about unstable currencies currency fluctuations
4 Complexity of investment products
4 I canrsquot afford to take financial advice
3 The fees charged by financial services companies
3 I donrsquot see the need to save for the long-term
Other 2
Donrsquot know 8
A pay rise
More generous tax breaks on long-term savings and pensions products
A better retirement plan pension match from my employer
Better and more frequent information about my retirement savings
Simpler investment products that I can understand with less jargon
Access to professional financial advice so that I have personalized recommendations on what steps I need to take
Access to financial education so that I am more aware of what I need to do for myself
Better legal protection in case I am sold the wrong product
Other
Not applicable - I already have sufficient savings
Donrsquot know
Obstacles and incentives to saving
Chart 12 Younger employees feel they donrsquot have money to invest for retirement Q What is the single biggest obstacle to you saving for retirement right now
Base 20-29 year olds
C
What is the single biggest obstacle preventing twentysomethings that they rank pressing and desirable life goals such as marriage
m saving for retirement Not having enough money to invest starting a family vacations and other leisure activities above the
top of the list cited by over a third (37) although this figure need to plan for retirement This suggests the savings gap is
ops to just 6 in the emerging market of China where mean preference-driven
omes are the lowest by far ($18000) suggesting that lack of
sh may be partly a state of mind Young employees in China The biggest obstacle to retirement savings cited by one-eighth
actually more worried about local concerns such as economic (13) of respondents is either not knowing how to invest for the
certainty (29) and currency instability (15) Behavioral long-term or the complexity of investment products charges and
ance has an impact too with the way young employees frame fees Ready solutions to this include improving young employeesrsquo
eir financial priorities creating its own obstacles to saving financial literacy about retirement planning and creating easier
many as 57 of 20-29 year olds believe that saving for access to professional financial advice
tirement is important but not a current priority suggesting
fro
is
dr
inc
ca
are
un
fin
th
As
re
19 | The Young Pragmatic and Penniless Generation
Chart 13 More money would incentivize young employees to save for retirement Q Which if any of the following would encourage you to save for retirement
Base 20-29 year olds
57 A pay rise
More generous tax breaks on long-term savings and pensions products
34
A better retirement plan pension match from my employer
33
Better and more frequent information about my retirement savings 26
Simpler investment products that I can understand with less jargon 24
Access to professional financial advice so that I have personalized recommendations on what steps I need to take 23
Access to financial education so that I am more aware of what I need to do for myself 22
Better legal protection in case I am sold the wrong product 16
Other 2
Not applicable - I already have sufficient savings 2
Donrsquot know 10
Chart 14 Very few younger employees have a written plan for retirement Q Which of the following best describes your retirement planning strategy
Base 20-29 year olds
5 Donrsquot know I have a
written plan
8
34 I have a plan but it is not
52 written down
I do not have a plan
Turning to incentives greater remuneration predictably tops a list Retirement planning of what would encourage 20-29 year olds to save for retirement Retirement planning is essential to adequate retirement saving
More tellingly a third (33) would like their employer to provide although it is somewhat lacking in todayrsquos younger employees
a better retirement plan into which both parties contribute Over half (52) have no retirement planning strategy at all
Better information and simple products would also help more and only 8 have noted down their retirement strategy
people to save A quarter (26) would be encouraged to save by
better and more frequent information about retirement savings Nevertheless the respondents polled believe that the current
while a similar number (24) want simple investment products global economy makes retirement planning increasingly
that are easy to understand As with the previous question a important ndash 71 agreed with this statement It is clear from this
lack of investment knowledge and the complexity of investment that young people between the ages of 20 and 29 do not lack
products are revealed as obstacles to savings the will to save they lack the opportunity
The Young Pragmatic and Penniless Generation | 20
Part 4 Creating the right conditions for young employees to save How may young employeesrsquo obstacles to saving be overcome For retirement readiness this will be a defining question of the early twenty-first centur y ndash and an extremely challenging one given the number of serious issues affecting younger employeesrsquo finances What was learned in the previous chapter about encouraging young employees to save is a start This chapter examines which areas and triggers to saving can be unlocked and whether government employer or individual should take most responsibility
21 | The Young Pragmatic and Penniless Generation
Friends and family
Professional financial adviser
17
24
Bank adviser 9
Personal finance websites online retirement planning tools
My employer
Government website
4
8
7
Insurance agent spokesperson
Accountant
3
3
Personal finance media 3
Lawyer
Bank website
3
2
Insurance company website
Donrsquot know
2
15
Information and advice on retirement saving strong theme revealed by our findings is that younger This finding is remarkably consistent across the countries
mployees want more information on savings products and sur veyed despite significant differences in market makeup
etter access to advice The largest share 24 (compared although some differences exist For instance a quar ter
o 17 for all employees) finds friends and family to be the (25) of young employees in France turn to bank advisers
ost important source of advice followed by professional for financial information nearly triple the number among all
dvisers (17) and bank advisers (9) That young employees young people (9)
urn to friends and family first suggests an unmet need for
rofessional financial advice This is both a challenge and an
pportunity for the financial ser vices sector
hart 15 For young employees friends and family are the leading source of retirement savings information Which of these sources (of information) is most important to you
ase 20-29 year olds
A
e
b
t
m
a
t
p
o
CQ
B
What is the role of the workplace in retirement planning Does this influence what retirement benefits younger
In response to shifting employment patterns todayrsquos younger employees expect from their workplace Certainly a majority
employees are less loyal to their employers than older workers favor workplace retirement plans with 61 believing that these
Fully 39 of 20-29 year olds are planning to look for a new job should be a fundamental part of pay (although this is lower
in the next 12 months compared to 29 of all workers and than for employees overall) and just 4 feel that retirement
31 frequently think about quitting their jobs Strikingly while planning should be left entirely to individuals
53 of all workers plan to stay with their current employer
until retirement just 37 of 20-29 year olds say this However there is evidence of a slight shift in perceptions
Younger workers are less likely to want workplace retirement
Doubtless much of this is because younger workers are more plans over other factors Of those who want employer
mobile and have more opportunities Another trigger to lower retirement plan contributions only 46 wanted this even if
employer loyalty may be the expectation of holding more jobs it reduced benefits and 35 (compared to 43 of all workers)
and even pursuing multiple careers over a working lifetime if it cut jobs
The Young Pragmatic and Penniless Generation | 22
Donrsquot know Employers should be
required to contribute to workersrsquo pensions
5 Nothing ndash it should be left to the government to take 18
care of its citizens 28
4 Nothing ndash it should be left to individual employees to
take care of themselves
13
22
Employers should provide a range of flexible benefits
and allow individuals to choose which benefits they
actually want
10 Employers should
be required to make a pension available but not
to contribute into it
Employers should not be required to provide pensions but should
provide information on how to plan for retirement
Chart 16 Most young workers feel that their employer should provide some kind of pension Q In the future what if anything should employers do to help people plan for retirement
Base 20-29 year olds
Are other workplace benefits more important Younger workers were asked to rate the importance of various workplace benefits The results reveal how highly they value the
elements of their compensation package Chart 17 shows that 87 of young employees believe a workplace retirement plan with
employer contributions would be an important factor when choosing their next job While retirement may be decades away for
twentysomethings 80 believe programs provide for a phased retirement are important
23 | The Young Pragmatic and Penniless Generation
Basic salary 94
93 Holiday entitlement
91 Overtime and bonus pay
91 Location of workplace
88 Medical health insurance
87 Opportunities for career progression
Access to a workplace retirement plan with employer contributions 87
Access to good training provision 86
Flexible working hours 85
Life insurance (death in service benefits) 81
Phased retirement or other employer programs providing for a transition into retirement 80
Ability to work past the normal retirement age 70
Access to a workplace retirement plan without employer contributions
67
Employee stock plans 65
Access to creche help with the cost of childcare 59
Opportunities for foreign travel 50
Company car 43
Chart 17 Workplace retirement plans are a relatively low priority for younger workers when choosing a job How important to you would the following workplace benefits be if you were choosing your next job
ase 20-29 year olds
Q
B
Regarding workplace benefits provided by employers today considered just enough to fulfill basic needs and in China a
young employees are about as likely as all workers to be offered fully formed nationwide retirement system is still some way off
retirement tools such as annual plan statements and online The future shape and affordability of these plans is debated in
tools from their employer though it is concerning that 24 do all of the sur vey countries to var ying degrees
not know if such tools are available or not Those provided are
considered helpful Younger workersrsquo views on reform are important because
changes to government retirement benefits are more likely
The role of government to affect them than any other part of the working population
The generosity of government retirement benefits varies The main concern cited by 57 is of facing less generous
considerably in the countries sur veyed In some countries such government retirement benefits than those enjoyed by their
as France government benefits are the primar y mechanism parentsrsquo generation
for funding retirement while in the United Kingdom they are
The Young Pragmatic and Penniless Generation | 24
The government should reduce the overall cost of state pension provision by
reducing the value of Donrsquot know individual pension plans
25 22
4 The government should not do anything State pension provision will
remain perfectly affordable in the future
28
21 The government should increase overall funding
available for the state pension through
raising taxes
The government should take a balanced approach with some reductions in individual payments and
some increases in tax
Chart 18 Young workers think that the government retirement system will need to be reformed Q With the cost of government retirement benefits becoming a greater concern as people live longer which
if any of the following do you think the government should undertake
Base 20-29 year olds
The younger generation believes that the government cannot What do young employees look for in a retirement product continue to provide as it does now ndash just 4 think government The sur vey findings show that young employees have
benefits will remain affordable to society However there is no reser vations about employer and government retirement
consensus on what governments should do to reform retirement benefits So what then do they want from a private savings
plan systems Over a fifth (22) think retirement entitlements product The savings product feature most valued by younger
should be cut just over a fifth (21) think governments should workers is protection against investment risk (Char t 19)
raise taxes and more than a quarter (28) think a mixture of This may be in the form of no loss of initial investment a
the two is the best solution Another quarter admits that they guaranteed income stream or protection against inflation
donrsquot know what should be done This is reasonable ndash the initial investment of those farthest
from retirement is most at risk However less consideration
is given to savings grow th through investment returns This
suggests that there is an oppor tunity to educate young
workers about the trade-off between returns and risk
management and what they stand to gain
25 | The Young Pragmatic and Penniless Generation
Chart 19 Products which protect against investment risk are the most important to young workers ( interested) Q Thinking about the types of financial products you could purchase to help provide you with security in retirement on a scale of 1 to 5
how interested are you in the following options
Base 20-29 year olds
A product providing a guaranteed retirement income stream or lifetime income in retirement 82
A product which protects my retirement income against inflation 81
A product which guarantees that I donrsquot lose my initial investment 81
A product which helps meet the cost of long-term care if I become unable to look after myself 80
A product which protects my capital from poor investment returns 79
A product which generates a retirement income and allows me to take a lump sum from the investment should I need to 79
A product where the annual management charges are kept low 78
A product which enables me to keep some control over how my savings are invested during my retirement 77
A product which manages the asset allocation so that I am never exposed to a level of risk Irsquom not comfortable with 76
A product which continues to provide a retirement income to my spouse in the event that I die first 75
A product which protects my family against having to pay estate taxes when I die 72
A product which locks in investment returns during the good years 70
The lsquodefined ambitionrsquo retirement system in This removes some of the disadvantages of leaving
the Netherlands a sustainable retirement solution retirement liabilities exclusively up to employers
for young workers (defined benefit) or employees (defined contribution)
In the Netherlands as elsewhere young workers are faced In the Netherlands this is likely to involve legislation which
with an increasing retirement age decreasing government lets retirement funds automatically adjust pay-outs and
suppor t for retirement and declining traditional defined retirement age as life expectancy changes xii
benefit employer retirement plans Reforms proposed
by the Dutch may show a way for ward for all mature and This model has garnered interest elsewhere In the
aging economies United Kingdom Pensions Minister Steve Webb expressed
interest on a more limited scale with a government
rsquoDefined ambitionrsquo proposes that risks are not taken on fully guarantee for a minimum rate of return for defined
by either employer or employee but are shared contribution retirement plans
The Young Pragmatic and Penniless Generation | 26
Recommendations Enabling young workers to save The studyrsquos findings reveal that the majority of young workers (66) are either saving consistently or aspire to start saving but face challenges including debt low pay and funding for significant life events and generational changes to the economic landscape and government and employer support If young people are to achieve a prosperous retirement their willingness to save should be met with better opportunities to save Here is what can be done by employers governments and young people themselves to address retirement planning concerns for younger adults
27 | The Young Pragmatic and Penniless Generation
Individuals Employers and governments
Determine how much income you need in retirement Auto-enroll employees into a workplace retirement plan Young people accept the need to save for retirement but donrsquot If an auto-enrollment workplace retirement plan is feasible
know how to act on that need They can become more retirement this can play a major role in getting young workers saving early
savvy simply by talking to friends and family (as do 24 of and regularly Combined with auto-escalation (the automatic
our respondents already) or employers going online to use annual increase in retirement plan contributions) and matching
retirement calculators or reading the personal finance media contributions it can lead to greater retirement readiness
Seek out a financial advisor Provide more flexible savings products through the workplace Young people are faced with life events that make it easy to Not all savings journeys start with a retirement plan particularly
feel overwhelmed by financial priorities in addition to retirement for young people who may think of retirement as lsquotoo far awayrsquo
planning Soliciting advice from a finance professional early in Employers can kick-start the savings habit in younger workers
life (17 of young employees have done so already) helps with by providing flexible easy to access and easy to understand
planning and priorities and making sense of long-term finances savings plans as a more attractive starter option
Start saving now and save consistently Make company retirement plans more portable As with all employees young people will strengthen their Young people move jobs much more often than previous
retirement readiness simply by saving regularly Today only 25 generations of employees so savings like DC retirement plans
of young people always save yet even small regular amounts need to follow employees when they change jobs
will improve retirement readiness over time
Make tax incentives more effective Ask your employer about workplace retirement savings plans All countries encourage long-term savings through tax relief but
and other retirement benefits young people often arenrsquot aware of this or donrsquot understand it
While one third (33) of young people believe that a workplace A more targeted system of tax relief could help provide clearer
retirement savings plan provides a major opportunity to start and simpler signals to younger people about the financial
saving employers often experience difficulties in engaging benefits of long-term saving
younger employees in discussions about retirement planning
The workplace is an important channel for achieving retirement Make better financial education central to the workplace readiness so be sure to max out on any employer contributions retirement offer
Young people who aspire to save may be prevented from
doing so by setting the wrong financial priorities Workplace
retirement education ndash alongside professional advice ndash can help
guide young people toward the right long-term priorities at an
earlier age in life
The Young Pragmatic and Penniless Generation | 28
29 | The Young Pragmatic and Penniless Generation
Glossary
Aegon Retirement Readiness Index (ARRI) c areer average retirement plan The ARRI assesses the relative levels of retirement A type of defined benefit plan that is based on an
preparedness of employees across different countries on a employeersquos average retirement earnings over the duration
scale from 1 to 10 The Index is based on three questions of plan membership Same as average salary plan
covering attitudes and three questions covering behaviors
defined ambition (DA) plan average salary plan A type of retirement plan in which retirement plan risks
A type of defined benefit plan that is based on an are shared between the employer and the employee
employeersquos average retirement earnings over the duration It offers greater certainty to savers around the final value
of plan membership Same as career average plan of their retirement assets than in DC plans and less
cost volatility for employers than with DB plans In the
a nnuity Netherlands Defined Ambition (DA) retirement plans are
A form of contract sold by life insurance companies that being introduced in order to help relieve the pressure on
guarantees a fixed or variable payment to the annuitant employers while still trying to provide employees with a
at some future time usually retirement All capital in the more secure retirement plan The United Kingdom too is
annuity grows tax-deferred looking at DA retirement plans as a solution
auto enrollment defined benefit (DB) plan An employer-sponsored retirement plan in which the An employer-sponsored retirement plan where the amount
employer is able to enroll an employee without that of future benefits an employee will receive from the plan is
employeersquos express authorization The employer determines defined typically by a formula based on salary history and
what percentage of the employeersquos salary or wages is years of service The amount of contributions the employer
contributed to the plan The employee is able to change is required to make will depend on the investment returns
this percentage and can opt out of enrollment in the plan experienced by the plan and the benefits promised
Contrast defined contribution plan
a uto-escalation A feature of a plan which automatically increases the defined contribution (DC) plan percentage of (retirement) funds saved from salary An employer-sponsored retirement plan such as a 401(k)
This feature generally uses a default or standard plan or a 403(b) plan in the United States in which
contribution escalation rate contributions are made to individual participant accounts
Depending on the type of DC plan contributions may be
B aby Boomers made by the employee the employer or both
A term used to refer to people generally born between
the end of World War II in 1945 and the mid 1960s The employeersquos benefits at retirement or termination of
Other generations Silent Generation - the generation born employment are based on the employee and employer
between 1925 and 1945 Generation X - the generation contributions and earnings and losses on those
born between 1965 and 1979 Millennials or Generation contributions See also 401(k) and 403(b) plan
Y - the generation born between 1980 and 2000 and often Contrast defined benefit plan
classified as the children of Baby Boomers
The Young Pragmatic and Penniless Generation | 30
401(k) plan An employer sponsored retirement plan that enables
employees to make tax-deferred contributions from their
salaries to the plan
403(b) plan An employer-sponsored defined contribution plan that
enables employees of universities public schools and
non-profit organizations to make tax-deferred contributions
from their salaries to the plan
final salary plan A type of defined benefit plan in which retirement
benefits are based on final retirement salary in the years
immediately before retirement benefits are received
Millennials A term used to refer to the people born from about 1980
to 2000 brought up using digital technology They are
often classified as the children of Baby Boomers
r etirement (or pension) plan Provides replacement for salary when a person is no
longer working due to retirement In the case of a defined
benefit retirement plan the employer or union contributes
to the plan which pays a predetermined benefit for the
rest of the employeersquos life based on length of service and
salary Payments may be made either directly or through
an annuity Retirement plan payments are taxable income
to recipients in the year received The employer or union
has fiduciary responsibility to invest the retirement plan
funds in stocks bonds real estate and other assets earn
a satisfactory rate of return and make payments to retired
workers Retirement plan funds holding trillions of dollars
are one of the largest investment forces in the stock
bond and real estate markets If the employer defaults in
the United States retirement plan payments are usually
guaranteed by the Pension Benefit Guaranty Corporation
(PBGC)
variable annuities (VA) An insurance contract in which the insurance company
guarantees a minimum payment at the end of the
accumulation period The payments may vary depending
on the financial performance of the managed portfolio
31 | The Young Pragmatic and Penniless Generation
About Aegon Transamerica Center for Retirement Studiesreg and Cicero Consulting
Aegon Transamerica Center Aegon is an international life insurance pensions and asset reg management company with businesses in over 20 markets for Retirement Studies in the Americas Europe and Asia Aegon companies employ The Transamerica Center for Retirement Studiesreg (TCRS) is
around 24000 people and serve millions of customers a division of the Transamerica Institute a nonprofit private
worldwide foundation TCRS is dedicated to educating the public on
wwwaegoncom emerging trends surrounding retirement security in the
United States TCRSrsquo research emphasizes employer-sponsored
In 2010 Aegon became a founding member of the Global retirement plans issues faced by small to mid-sized companies
Coalition on Aging which seeks to raise awareness of aging and their employees and the implications of legislative and
issues among policymakers and the general public A major aim regulatory changes Transamerica Institute is funded by
of the coalition is to transform the way we think and speak contributions from Transamerica Life Insurance Company and
about aging replacing the familiar rhetoric of lsquoproblemsrsquo with its affiliates and may receive funds from unaffiliated third-
a more positive discussion of lsquopossibilitiesrsquo and lsquoopportunitiesrsquo parties For more information about TCRS please refer to
wwwglobalcoalitiononagingcom wwwtransamericacenterorg
Cicero Consulting A leading consultancy firm serving the banking insurance and
asset management sector Cicero specializes in public policy
and communications consulting as well as global thought
leadership and independent market research Cicero was
established in 2001 and now operates from offices in London
Brussels Washington and Singapore As a market leader in
pensions and retirement research Cicero designed
and analyzed the research and contributed to the report
wwwcicero-groupcom
The Young Pragmatic and Penniless Generation | 32
Marta acebo Mark Green Patricia Plas
Paula alvarez douGlas henck scott roane
Frits bart wendel hoFMan thurstan robinson
Grace basile
lynette belFry
andrew berwick
Frans van der horst
tatsuo kai
herMan kaPPelle
Patti rowey
sarah russell
Joost van schaGen
robin boon Gaacutebor kePecs dick schiethart
bert-JaaP brons Marco keiM erik schouten
douG brooks
libby buet
kent callahan
JaiMe kirkPatrick
bas knol
roGer koch
anGela seyMour Jackson
kate sMith
renske stoker
Jeanne de cervens
dana chen
Peter kunkel
alexander kuiPers
eyleen sun
MartiJn tans
arkadiusz chMurzynski
heidi cho
brian lewis
Mike linder
GreG tucker
Mark twiGG
siMon clow siMon luke catherine wanG
robert colliGnon Jason Ma Marc van weede
catherine collinson GrzeGorz Mathea tiM willaert
wendy daniels
Michel denizot
edit drevenka
Paul Middleton
takaoh MiyaGawa
david Moulton
daniel wriGht
alex wynaendts
MacieJ zaPala
Jan driessen
kelly Fu
adrian Grace
Mark Mullin
Marcelle noltenius
stiG nybo
Peacuteter zatykoacute
vicky zeldin
Disclaimer This repor t contains general information only and does
not constitute a solicitation or offer No rights can be
derived from this repor t Aegon its par tners and any of
their affiliates or employees do not guarantee warrant
or represent the accuracy or completeness of the
information contained in the repor t
Acknowledgements
33 | The Young Pragmatic and Penniless Generation
References and notes i For a comparison of different retirement systems see lsquoPensions at a Glance 2011rsquo OECD 2011 ii As the survey was carried out online the survey results in China are based toward people living in urban areas iii ldquoPensions Marketsrdquo TheCityUK March 2013 p9 iv Global Employment Trends for Youth 2013 A generation at risk International Labour Organisation 2013 p2 v Eurostat July 2013 vi OECD Employment and Labour Markets Key Tables from OECD No 2 2012 vii The Federal Reserve Bank of New York 2012 Quarterly Report on Household Debt March 29 2013 viii World Bank ix lsquoWorld-class povertyrsquo The Economist February 27 2013
httpwwweconomistcomblogsanalects201302chinas-poor x lsquoThe Chinese slow down in char tsrsquo The Economist July 15 2013 xi lsquoChina rsquos welfare system difficult inflexible and blatantly unfairrsquo The Guardian April 23 2013
httpwwwtheguardiancomglobal-development2013apr23china-welfare-system-inflexible-unfair xii lsquo The Dutch experience with Defined Ambition pensions and the impact on companiesrsquo Aegon Global Pensions March 12 2013
httpwwwaegonglobalpensionscomenHomePublicationsNews-archiveNewsThe-Dutch-experience-with-Defined
Ambition-pensions-and-what-that-may-mean-for-companies-in-the-Netherlands-and-the-UK
shy
The Young Pragmatic and Penniless Generation | 34
Contact information HE ADQUARTER S
Aegon NV
PO Box 85
2501 CB The Hague
Telephone +31 70 344 32 10
w w waegoncom
MEDIA REL ATIONS
Telephone +31 70 344 89 56
Email gcc-iraegoncom
Countr y Index score
Germany 548
China 541
Canada 524
United States 519
The Netherlands 488
United Kingdom 486
Sweden 483
France 475
Hungar y 473
Poland 463
Spain 440
Japan 430
Total 489
Appendix 1 Aegon Retirement Readiness Index (ARRI) - technical note
Aegon Retirement Readiness Index (ARRI)-technical note 2013 Weightings (2012 in brackets) A sample of 12000 pre and post retirees was drawn from 1 Personal responsibilit y 20 (30)
twelve countries Of these 10800 (90) were pre-retirees 2 Level of awareness 30 (35)
and these were chosen for fur ther analysis of their plans 3 Financial capability Understanding 30 (25)
for retirement The Index that was developed forms an 4 Retirement planning 50 (50)
assessment of how well an individual perceives the adequacy 5 Financial preparedness 60 (60)
of his her own finances and financial awareness specifically 6 Income replacement 35 (35)
for addressing his retirement needs
Note that the weights devised to show the relative
The lsquotargetrsquo for the Index impor tance of each question in calculating the Index add to
The question on current savings activity was designated as the 225 These were then re-scaled so that a final scale of 1 to
target question (dependent variable) for predicting the level of 10 was calculated
preparedness for retirement Responses to this question were
then correlated with each of the six key questions (variables) Final scores by country below to understand which were driving the activity These weightings were multiplied by the actual scores for each
This was done because it was not felt to be correct to give respondent for each of the six Index questions and aggregated
each of the six variables described below an equal weight as to obtain a provisional score This was then adjusted to
they appeared to have quite different relationships to the give countr y scores out of 1 to 10 (A score of 1 to 10 had
target question sufficient differentiation to be used as the scale for analysis)
1 Personal responsibilit y for income in retirement
2 Level of awareness of need to plan for retirement
3 F inancial capability Understanding of financial matters
regarding plans for retirement
4 Retirement planning Level of development of plans
5 Financial preparedness for retirement
6 Income replacement Level of projected income replacement
The weighting To estimate the statistical significance of the decline in overall
scores in this yearrsquos Index is theoretically incalculable
Two things have changed from 2012 to 2013
1 C anada and China have joined the sample
2 The new countries have thus influenced the weights of
emphasis placed on the 6 variables used to calculate
the score hence the weights attached to the complex
calculation have changed
However it is noticeable that for countries which were sampled
in both time periods the mean scores for the six individual
variables have almost invariably declined and on average more
than half of them have shown a significant level of decline
In particular the question lsquoDo you think you will achieve this
incomersquo has for all countries shown a significant level of
decline We thus hypothesize that the comparative results
show a significant decline
The Young Pragmatic and Penniless Generation | 36
Net
herl
ands
Net
herl
ands
Net
herl
ands
Ger
man
yG
erm
any
Ger
man
yBase 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
Better off 7 4 23 Sw
eden
Swed
en11 5 7 8 3 11 14 50 5
Swed
en
About the same 19 18 27 23 8 19 18 13 29 29 24 21 U
ntie
dU
ntie
dU
nite
d Worse off 66 74 41 58 79 69 71 76 51 47 21 55
Kin
gdom
Kin
gdom
Kin
gdom
Donrsquot know 9 3 9 9 9 4 4 8 9 10 6 19
Fran
ceFr
ance
Fran
ce
Chart 2 Education of 20 ndash 29 year olds by country Q Please choose from the following list the highest level of educational or professional qualification you have
Spai
nSp
ain
Spa
in
Pol
and
Pol
and
Pol
and
Hun
gary
Hun
gary
Hun
gar y
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
dU
nite
d 100 100 100 100 100 100 100 100 100
Stat
es100 100 100
Stat
esSt
ates
Less than high school graduate 2 44 6 14 1 3 2 7 1 3 Ca
nada
Cana
daC
anad
aHigh school graduate 11 33 53 23 22 22 4 41 14 21 1 2
Some college or trade school 46 2 9 9 9 19 37 14 28 20 4 33 Ch
ina
Chin
aC
hina
College degree University degree 31 15 27 30 41 43 21 33 50 46 9 57
Postgraduate degree or 8 3 3 23 25 11 36 1 8 9 80 6 qualification Ja
pan
Japa
n Ja
pan
Other 2 4 1 1 1 2 0 5 0 6 2
None 0 1 1 0 1 0 0
NET Less than undergrad degree 61 82 70 47 34 46 43 66 42 45 11 37
NET Undergrad degree or higher 39 18 30 53 66 54 57 34 58 55 89 63
Chart 3 Aegon Retirement Readiness Index scores for young employees by country
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
NET Low Index (0-5) 80 64 79 81 85 78 81 73 65 61 61 87
NET Medium Index (6-7) 15 30 18 15 14 21 17 23 25 31 31 12
NET High Index (8-10) 4 6 3 3 1 2 2 4 10 8 7 1
Appendix 2 Country comparisons Chart 1 The majority of young employees believe that they will be worse off in retirement compared to their parents Q Do you think that future generations of retirees will be better off or worse off than those currently in retirement
37 | The Young Pragmatic and Penniless Generation
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsI always make sure that 27 34 27 26 17 14 19 22 35 33 32 20 I am saving for retirement
I only save for retirement G
erm
any
Ger
man
y21 27 20 13 17 21 16 6 17 24 20 24 occasionally from time to time
I am not saving for retirement now 6 11 8 11 5 15 9 4 10 8 9 5 although I have in the past Sw
eden
Swed
en
I am not saving for retirement 35 23 34 46 53 40 49 54 36 33 38 46 though I do intend to U
nite
dU
ntie
dK
ingd
omK
ingd
om I have never saved for retirement and 11 6 10 5 8 10 6 13 3 2 1 6 donrsquot intend to
Fran
ceFr
ance
Chart 5 Younger people are more likely not to be using any means of retirement savings Sp
ain
Spai
nQ Which financial means if any are you currently using to prepare for your retirement
Pol
and
Pol
and
only asked in Germany only asked in Spain
Hun
gary
Hun
gary
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
dSt
ates
Stat
es100 100 100 100 100 100 100 100 100 100 100 100
Defined benefit plan 16 10 25 29 15 3 76 11 20 13 5 Ca
nada
Cana
daDefined contribution plan 28 10 17 19 19 14 10 23 40 7 3
Private pension 8 18 14 10 5 9 4 13 12 40 66 4 Ch
ina
Chin
a Government pension social security 12 43 14 21 8 7 4 18 27 33 71 35
Stocks 5 12 14 7 4 17 7 2 13 10 23 9
Bonds 1 8 5 6 2 16 4 2 8 13 14 3 Ja
pan
Japa
n
Mutual funds 2 14 23 4 2 10 3 4 7 16 9 6
Investment insurances (annuities) 2 3 2 3 2 9 4 5 2 4 6 1
Savings accounts 23 37 38 25 23 6 29 15 36 37 65 36
Investment property 2 10 6 7 9 2 5 2 5 11 18 1
Employee stock purchase 1 1 1 4 1 29 0 4 1 7 1
My home 10 5 8 7 7 8 4 6 6 14 30 1
Reverse mortgage 1 4 2 4
My business 2 1 3 2 2 4 1 1 2 4 12 1
Inheritance 3 11 7 11 7 9 9 8 7 9 6 2
Annuities 1 15 2 2 1 4 3 2 1 2 8
Long-term care insurance 2 1 3 2 9 5 1 6 4 7 1
Life insurance 6 11 8 8 14 3 18 15 19 18 36 17
Unterstuumltzungskasse aus 2 Eigenmitteln finanziert
Unterstuumltzungskasse vom 2 Arbeitgeber finanziert
Chart 4 Younger employees are much more likely to aspire to save for retirement Which of the following best explains your approach to saving for retirement This can include money you contribute to any long-term
investment including pensions stocks and shares investment-linked insurances property etc
Q
The Young Pragmatic and Penniless Generation | 38
Plan de empleo mixto 2 (combinacioacuten de las dos anteriores)
Other 1 6 4 0 1 2 2 3 2 2 3 3
None nothing 8 14 12 23 25 31 6 27 21 17 3 24
Donrsquot know 29 6 17 13 19 8 4 9 7 7 0 9
hart 6 The younger generation has more negative associations of retirement Which if any of the following words do you most associate with retirement
Net
herl
ands
Net
herl
ands
Ger
man
yG
erm
any
Swed
enSw
eden
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
d100 100 100 100 100 100 100 100 100 100 100 100
Kin
gdom
Kin
gdom
Freedom 35 32 36 39 19 26 11 20 35 40 37 33
Opportunity 7 27 25 18 4 8 9 10 17 16 9 16 Fr
ance
Fran
ceLeisure 58 48 36 41 23 24 43 32 50 50 55 6
Excitement 2 5 3 8 2 6 1 2 17 17 4 3 Sp
ain
Spai
nPoverty 11 26 23 11 26 14 37 44 7 5 6 20
Insecurity 34 24 18 16 20 18 35 56 10 9 18 44 P
olan
dP
olan
dLoneliness 4 10 17 16 12 7 11 8 5 9 20 12
Ill health 2 19 7 14 15 9 49 23 6 6 29 11 H
unga
ryH
unga
ryDependent on others 11 11 5 18 14 8 18 19 14 6 11 4
Tired 3 4 8 10 14 10 17 6 7 7 13 19 U
nite
dU
nite
dFar away 38 19 25 21 61 32 2 13 33
Stat
es33 14 22
Stat
es
Boredom 14 16 6 12 16 12 15 8 12 12 16 17 Ca
nada
Cana
daEnjoyment 21 16 17 23 14 29 5 3 37 37 35 15
None of the above 0 1 1 2 0 2 1 1 2 2 1 2
Donrsquot know 2 2 3 3 2 2 1 2 0 Ch
ina
6 Ch
ina
hart 7 Many young employees think they are not on course to achieve target retirement income Ja
pan
Japa
n Do you think you will achieve this income [your estimated income needed in retirement]
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
I donrsquot know if I am on course to 56 37 57 59 50 39 49 48 48 41 22 68 achieve my retirement income
No I am on course to achieve around one-quarter (25) of my 10 14 9 13 15 14 14 13 10 10 10 7 retirement income
No I am on course to achieve around 12 20 14 11 19 19 18 15 12 11 23 12 half of my retirement income
No I am on course to achieve around three-quarters (75) of my 8 14 7 4 8 15 9 8 6 11 20 5 retirement income
Yes I am on course to achieve my 15 15 13 14 8 13 11 17 25 27 25 8 retirement income
CQ
CQ
39 | The Young Pragmatic and Penniless Generation
Chart 8 Young people in most countries expect to retire before 65 Q At what age do you expect to retire from all paid employment
Net
herl
ands
Ger
man
y
Swed
en
Uni
ted
Kin
gdom
Fran
ce
Spai
n
Pol
and
Hun
gary
Uni
ted
Stat
es
Cana
da
Chin
a
Japa
n
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
40 or under 0 1 1 0 0 1 3 1 5 12
41-50 1 2 3 5 2 2 6 3 9 4 37 9
51-59 4 4 4 6 2 4 11 5 7 10 30 1
60 5 11 8 12 10 13 19 12 12 16 21 27
61-64 2 11 10 2 20 7 4 13 5 3 1 2
65 17 22 44 31 34 32 16 26 26 32 3 25
66-69 42 32 15 9 12 29 20 13 9 9 0 1
70 19 11 10 18 10 5 10 9 13 12 0 6
71+ 5 5 5 9 4 5 5 3 7 5 1 4
Never 2 1 1 2 2 2 6 4 1 0 0
Donrsquot know 2 3 2 5 3 2 8 9 5 5 1 13
Mean 67 65 65 65 64 65 63 64 63 64 53 59
Median 67 65 65 65 65 65 65 65 65 65 55 60
Chart 9 Younger employees feel they donrsquot have money to invest for retirement Q What is the single biggest obstacle to you saving for retirement right now
Net
herl
ands
Ger
man
y
Swed
en
Uni
ted
Kin
gdom
Fran
ce
Spai
n
Pol
and
Hun
gary
Uni
ted
Stat
es
Cana
da
Chin
a
Japa
n
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
The uncertain economic environment 19 8 13 9 13 19 11 14 12 9 29 27
Lack of money to invest 28 41 33 43 47 34 48 55 47 50 6 19
Fear of poor investment returns over the coming years 2 5 10 7 5 6 8 2 6 8 14 6
Complexity of investment products 4 4 4 3 5 3 5 2 12 5
I donrsquot know how to go about investing for the long-term 2 3 10 8 5 5 3 3 6 8 7 9
The fees charged by financial services companies 2 4 4 2 4 3 4 2 3 5 2 5
I canrsquot afford to take financial advice 3 3 6 8 2 4 3 5 3 2 3 2
I donrsquot trust the financial services industry 12 11 8 6 5 10 6 2 2 3 5 4
I donrsquot see the need to save for the long-term 6 1 2 2 3 3 3 1 2 1 4 3
Concerns about unstable currencies currency fluctuations 2 5 1 3 3 3 4 3 4 5 15 2
Other (PLEASE STATE) 3 3 1 1 3 2 4 6 2 2 1
Donrsquot know 17 12 11 7 8 6 3 6 8 6 3 17
The Young Pragmatic and Penniless Generation | 40
Chart 10 More money would incentivize young employees to save for retirement Q Which if any of the following would encourage you to save for retirement
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsMore generous tax breaks on long-term savings and pensions 20 44 30 32 27 23 42 42 33 43 40 32 products
Ger
man
yG
erm
any
Access to financial education so that I am more aware of what 24 6 14 21 16 22 21 12 23 24 43 25 I need to do for myself
Swed
enSw
eden
Access to professional financial advice so that I have personalized
Uni
ted
20 24 23 23 15 21 25 9 22 23 44 13 U
nite
drecommendations on what steps
Kin
gdom
Kin
gdom
I need to take
Simpler investment products that 12 33 19 28 20 Fr
ance
18 27 16 32 28 36 10 Fr
ance
I can understand with less jargon
Better and more frequent information about my retirement 16 28 20 27 27 23
Spai
n20 18 25 31 45 22
Spai
nsavings
Better legal protection in case I am 12 18 13 18 10 24 18 13 13 19 21 6 P
olan
dP
olan
dsold the wrong product
A pay rise 46 54 44 64 55 50 70 72 67 64 53 37
A better retirement plan pension H
unga
ryH
unga
ry27 32 25 33 29 26 42 35 39 44 33 32 match from my employer
Other 4 2 1 1 2 2 3 3 2 U
nite
d3 0
Uni
ted
Stat
esSt
ates
Donrsquot know 17 9 16 10 10 12 3 8 8 5 3 17
Not applicable - I already have 3 3 4 2 2 1 1 1 2 2 3 sufficient savings Ca
nada
Cana
da
Chin
aCh
ina
Chart 11 A majority of younger employees do not have a written plan for retirement Q Which of the following best describes your retirement planning strategy
Japa
n Ja
pan
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
I have a written plan 7 18 10 9 6 8 6 5 13 10 8 4
I have a plan but it is not written 24 47 37 25 23 31 29 31 37 44 55 24
down
I do not have a plan 61 32 51 61 62 55 62 58 45 42 34 61
Donrsquot know 7 3 3 5 8 6 3 6 4 4 3 12
41 | The Young Pragmatic and Penniless Generation
Chart 12 For young employees friends and family are the leading source of retirement savings information Q And which of these sources (of information) is most important to you
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
Bank adviser 6 11 19 5 25 5 7 4 3 17 10 2 N
ethe
rlan
dsN
ethe
rlan
dsProfessional financial adviser 12 22 10 12 10 19 19 22 21 25 19 10
Insurance agent spokesperson 3 10 2 3 1 3 6 2 3 0 3 2 G
erm
any
Ger
man
yInsurance company website 3 1 3 2 4 4 2 2 1 3 1
Personal finance websites online 8 5 7 8 5 4 10 8 12 6 10 8 retirement planning tools Sw
eden
Swed
enPersonal finance media 2 2 2 2 2 6 3 1 2 1 6 2
Government website 7 1 3 6 U
nite
d5 2 3 3 2 3 7 1
Uni
ted
Kin
gdom
Kin
gdom
Bank website 2 3 3 2 1 0 3 2 1 6 3 3
My employer 12 8 4 9 4 7 5 12 8 5 4 1 Fr
ance
Fran
ceAccountant 2 6 4 4 1 3 1 3 5 5 1 3
Lawyer 2 3 1 2 2 8 4 2 1 2 2 0 Sp
ain
Spai
nFriends and family 21 22 30 28 24 26 18 24 26 20 25 24
None of these P
olan
dP
olan
dNot applicable 21 7 16 18 19 13 17 15 14 9 5 41
Hun
gary
Hun
gary
Chart 13 Most young workers feel their employer should provide some kind of pension Q In the future what if anything should employers do to help people plan for retirement
Uni
ted
Uni
ted
Stat
esSt
ates
Cana
daCa
nada
Chin
aCh
ina
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 Ja
pan
Japa
n Employers should be required to 24 43 20 40 21 26 20 28 37 34 20 30 contribute to workersrsquo pensions
Employers should be required to make a pension available but not to 12 13 7 17 20 15 15 4 11 14 22 5 contribute into it
Employers should not be required to provide pensions but should 15 9 12 8 9 8 11 6 11 9 9 11 provide information on how to plan for retirement
Employers should provide a range of flexible benefits and 13 18 18 16 15 27 25 28 21 22 45 12 allow individuals to choose which benefits they actually want
Nothing ndash it should be left to individual employees to take care 2 2 5 1 4 3 3 5 6 5 1 9 of themselves
Nothing ndash it should be left to the government to take care of its 2 5 5 2 5 8 15 14 1 4 0 4 citizens
Donrsquot know 30 10 32 17 27 12 12 15 13 13 3 29
The Young Pragmatic and Penniless Generation | 42
Chart 14 Workplace pensions are relatively low down in young workersrsquo priorities when choosing a job Q How important to you would the following workplace benefits be if you were choosing your next job
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsBasic salary 86 93 88 91 88 92 90 94 90 93 96 94
Holiday entitlement 87 94 89 91 92 94 91 94 93 94 96 91 G
erm
any
Ger
man
yOvertime and bonus pay 86 93 87 88 89 90 89 94 90 91 97 90
Location of workplace 88 91 86 92 89 90 89 92 93 93 92 86 Sw
eden
Swed
enMedical health insurance 73 92 84 65 86 87 88 87 93 94 98 83
Opportunities for career progression 86 91 81 90 90 94 91 94 92 91 96 81 U
nite
dU
nite
dAccess to a workplace retirement 85 85 81 82
Kin
gdom
78 84 80 78 84 86 93 74 K
ingd
omplan with employer contributions
Access to good training provision 85 87 85 88 86 91 85 93 86 90 95 74 Fr
ance
Fran
ceFlexible working hours 79 87 58 86 81 89 81 87 91 91 92 57
Life insurance 72 75 79 69 80 82 Sp
ain
84 80 81 88 93 74 Sp
ain
(death in service benefits)
Phased retirement or other employer programs providing for 74 54 75 71 72 81 76 74 76 81 91 65
Pol
and
Pol
and
a transition into retirement
Ability to work past the normal 68 57 64 65 64 74 72 65 74 76 80 70 retirement age H
unga
ryH
unga
ry
Access to a workplace retirement 62 74 61 68 59 77 61 47 68 74 89 65 plan without employer contributions U
nite
dU
nite
dSt
ates
Stat
esEmployee share plans 50 72 54 65 59 73 61 51 64 73 91 55
Access to creche help with the 67 75 64 56 69 79 75 83 58 69 89 68 cost of childcare Ca
nada
Cana
da
Opportunities for foreign travel 53 54 60 55 50 71 58 66 57 61 79 37
Company car 51 46 45 47 49 63 51 49 36 49 69 Ch
ina
39 Ch
ina
Japa
n Ja
pan
Chart 15 Young workers think the state pension will need to be reformed Q With the cost of government pensions becoming a greater concern as people live longer which if any of the following do you think
the government should undertake
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
The government should reduce the overall cost of state pension 15 33 16 15 16 20 28 22 21 26 30 16 provision by reducing the value of individual pension plans
The government should increase overall funding available for the 12 21 30 22 14 34 19 26 21 18 29 10 state pension through raising taxes
43 | The Young Pragmatic and Penniless Generation
he government should take a alanced approach with some 27 26 12 30 28 23 24 16 34 31 38 41 eductions in individual payments nd some increases in tax
he government should not do nything State pension provision 7 2 12 5 3 4 3 3 5 4 0 5 ill remain perfectly affordable in he future
onrsquot know 38 19 29 29 39 20 26 34 19 21 4 28
Net
herl
ands
art 16 Products which protect against investment risk are the most important to young workers ( interested) Thinking about the types of financial products you could purchase to help provide you with security in retirement on a scale of 1 to 5
how interested are you in the following options G
erm
any
Swed
en
Uni
ted
Kin
gdom
ase 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 Fr
ance
100 100 100 100 100 100 100 100 100 100 100 100
product providing a guaranteed etirement income stream or 75 81 73 76 74 83 78 76 87 85 94 69
Spai
nifetime income in retirement
product which protects my 74 79 73 76 72 82 77 74 84 86 94 65 etirement income against inflation P
olan
d
product which guarantees that I 72 82 73 78 75 81 76 73 86 86 90 67 onrsquot lose my initial investment H
unga
ry product which helps meet the ost of long-term care if I become 74 79 74 77 70 79 76 71 86 85 84 66
Uni
ted
nable to look after myself St
ates
product which protects my capital 71 81 71 76 68 76 77 73 84 83 93 65 rom poor investment returns Ca
nada
product which generates a etirement income and allows 69 78 71 75 68 81 77 72 84 86 94 70 e to take a lump sum from the
Chin
anvestment should I need to
product where the annual 66 78 68 75 72 79 77 70 85 86 87 64 anagement charges are kept low Ja
pan
product which enables me to eep some control over how my 71 73 70 75 72 80 75 69 88 85 91 63 avings are invested during my etirement
product which manages the sset allocation so that I am never 68 70 67 73 66 76 71 67 80 83 95 60 xposed to a level of risk Irsquom not omfortable with
product which continues to rovide a retirement income to my 74 78 71 75 73 81 79 73 86 82 94 60 pouse in the event that I die first
product which protects my family gainst having to pay estate taxes 73 76 71 74 75 81 75 69 82 82 89 56 hen I die
product which locks in investment 72 71 63 73 64 71 59 56 81 84 89 61 eturns during the good years
Tbra
Tawt
D
ChQ
B
Arl
Ar
Ad
Acu
Af
Armi
Am
Aksr
Aaec
Aps
Aaw
Ar
The Young Pragmatic and Penniless Generation | 44
Lack of money to invest 37
16 The uncertain economic environment
7 Fear of poor investment returns over the coming years
6 I donrsquot trust the financial services industry
6 I donrsquot know how to go about investing for the long-term
4 oncerns about unstable currencies currency fluctuations
4 Complexity of investment products
4 I canrsquot afford to take financial advice
3 The fees charged by financial services companies
3 I donrsquot see the need to save for the long-term
Other 2
Donrsquot know 8
A pay rise
More generous tax breaks on long-term savings and pensions products
A better retirement plan pension match from my employer
Better and more frequent information about my retirement savings
Simpler investment products that I can understand with less jargon
Access to professional financial advice so that I have personalized recommendations on what steps I need to take
Access to financial education so that I am more aware of what I need to do for myself
Better legal protection in case I am sold the wrong product
Other
Not applicable - I already have sufficient savings
Donrsquot know
Obstacles and incentives to saving
Chart 12 Younger employees feel they donrsquot have money to invest for retirement Q What is the single biggest obstacle to you saving for retirement right now
Base 20-29 year olds
C
What is the single biggest obstacle preventing twentysomethings that they rank pressing and desirable life goals such as marriage
m saving for retirement Not having enough money to invest starting a family vacations and other leisure activities above the
top of the list cited by over a third (37) although this figure need to plan for retirement This suggests the savings gap is
ops to just 6 in the emerging market of China where mean preference-driven
omes are the lowest by far ($18000) suggesting that lack of
sh may be partly a state of mind Young employees in China The biggest obstacle to retirement savings cited by one-eighth
actually more worried about local concerns such as economic (13) of respondents is either not knowing how to invest for the
certainty (29) and currency instability (15) Behavioral long-term or the complexity of investment products charges and
ance has an impact too with the way young employees frame fees Ready solutions to this include improving young employeesrsquo
eir financial priorities creating its own obstacles to saving financial literacy about retirement planning and creating easier
many as 57 of 20-29 year olds believe that saving for access to professional financial advice
tirement is important but not a current priority suggesting
fro
is
dr
inc
ca
are
un
fin
th
As
re
19 | The Young Pragmatic and Penniless Generation
Chart 13 More money would incentivize young employees to save for retirement Q Which if any of the following would encourage you to save for retirement
Base 20-29 year olds
57 A pay rise
More generous tax breaks on long-term savings and pensions products
34
A better retirement plan pension match from my employer
33
Better and more frequent information about my retirement savings 26
Simpler investment products that I can understand with less jargon 24
Access to professional financial advice so that I have personalized recommendations on what steps I need to take 23
Access to financial education so that I am more aware of what I need to do for myself 22
Better legal protection in case I am sold the wrong product 16
Other 2
Not applicable - I already have sufficient savings 2
Donrsquot know 10
Chart 14 Very few younger employees have a written plan for retirement Q Which of the following best describes your retirement planning strategy
Base 20-29 year olds
5 Donrsquot know I have a
written plan
8
34 I have a plan but it is not
52 written down
I do not have a plan
Turning to incentives greater remuneration predictably tops a list Retirement planning of what would encourage 20-29 year olds to save for retirement Retirement planning is essential to adequate retirement saving
More tellingly a third (33) would like their employer to provide although it is somewhat lacking in todayrsquos younger employees
a better retirement plan into which both parties contribute Over half (52) have no retirement planning strategy at all
Better information and simple products would also help more and only 8 have noted down their retirement strategy
people to save A quarter (26) would be encouraged to save by
better and more frequent information about retirement savings Nevertheless the respondents polled believe that the current
while a similar number (24) want simple investment products global economy makes retirement planning increasingly
that are easy to understand As with the previous question a important ndash 71 agreed with this statement It is clear from this
lack of investment knowledge and the complexity of investment that young people between the ages of 20 and 29 do not lack
products are revealed as obstacles to savings the will to save they lack the opportunity
The Young Pragmatic and Penniless Generation | 20
Part 4 Creating the right conditions for young employees to save How may young employeesrsquo obstacles to saving be overcome For retirement readiness this will be a defining question of the early twenty-first centur y ndash and an extremely challenging one given the number of serious issues affecting younger employeesrsquo finances What was learned in the previous chapter about encouraging young employees to save is a start This chapter examines which areas and triggers to saving can be unlocked and whether government employer or individual should take most responsibility
21 | The Young Pragmatic and Penniless Generation
Friends and family
Professional financial adviser
17
24
Bank adviser 9
Personal finance websites online retirement planning tools
My employer
Government website
4
8
7
Insurance agent spokesperson
Accountant
3
3
Personal finance media 3
Lawyer
Bank website
3
2
Insurance company website
Donrsquot know
2
15
Information and advice on retirement saving strong theme revealed by our findings is that younger This finding is remarkably consistent across the countries
mployees want more information on savings products and sur veyed despite significant differences in market makeup
etter access to advice The largest share 24 (compared although some differences exist For instance a quar ter
o 17 for all employees) finds friends and family to be the (25) of young employees in France turn to bank advisers
ost important source of advice followed by professional for financial information nearly triple the number among all
dvisers (17) and bank advisers (9) That young employees young people (9)
urn to friends and family first suggests an unmet need for
rofessional financial advice This is both a challenge and an
pportunity for the financial ser vices sector
hart 15 For young employees friends and family are the leading source of retirement savings information Which of these sources (of information) is most important to you
ase 20-29 year olds
A
e
b
t
m
a
t
p
o
CQ
B
What is the role of the workplace in retirement planning Does this influence what retirement benefits younger
In response to shifting employment patterns todayrsquos younger employees expect from their workplace Certainly a majority
employees are less loyal to their employers than older workers favor workplace retirement plans with 61 believing that these
Fully 39 of 20-29 year olds are planning to look for a new job should be a fundamental part of pay (although this is lower
in the next 12 months compared to 29 of all workers and than for employees overall) and just 4 feel that retirement
31 frequently think about quitting their jobs Strikingly while planning should be left entirely to individuals
53 of all workers plan to stay with their current employer
until retirement just 37 of 20-29 year olds say this However there is evidence of a slight shift in perceptions
Younger workers are less likely to want workplace retirement
Doubtless much of this is because younger workers are more plans over other factors Of those who want employer
mobile and have more opportunities Another trigger to lower retirement plan contributions only 46 wanted this even if
employer loyalty may be the expectation of holding more jobs it reduced benefits and 35 (compared to 43 of all workers)
and even pursuing multiple careers over a working lifetime if it cut jobs
The Young Pragmatic and Penniless Generation | 22
Donrsquot know Employers should be
required to contribute to workersrsquo pensions
5 Nothing ndash it should be left to the government to take 18
care of its citizens 28
4 Nothing ndash it should be left to individual employees to
take care of themselves
13
22
Employers should provide a range of flexible benefits
and allow individuals to choose which benefits they
actually want
10 Employers should
be required to make a pension available but not
to contribute into it
Employers should not be required to provide pensions but should
provide information on how to plan for retirement
Chart 16 Most young workers feel that their employer should provide some kind of pension Q In the future what if anything should employers do to help people plan for retirement
Base 20-29 year olds
Are other workplace benefits more important Younger workers were asked to rate the importance of various workplace benefits The results reveal how highly they value the
elements of their compensation package Chart 17 shows that 87 of young employees believe a workplace retirement plan with
employer contributions would be an important factor when choosing their next job While retirement may be decades away for
twentysomethings 80 believe programs provide for a phased retirement are important
23 | The Young Pragmatic and Penniless Generation
Basic salary 94
93 Holiday entitlement
91 Overtime and bonus pay
91 Location of workplace
88 Medical health insurance
87 Opportunities for career progression
Access to a workplace retirement plan with employer contributions 87
Access to good training provision 86
Flexible working hours 85
Life insurance (death in service benefits) 81
Phased retirement or other employer programs providing for a transition into retirement 80
Ability to work past the normal retirement age 70
Access to a workplace retirement plan without employer contributions
67
Employee stock plans 65
Access to creche help with the cost of childcare 59
Opportunities for foreign travel 50
Company car 43
Chart 17 Workplace retirement plans are a relatively low priority for younger workers when choosing a job How important to you would the following workplace benefits be if you were choosing your next job
ase 20-29 year olds
Q
B
Regarding workplace benefits provided by employers today considered just enough to fulfill basic needs and in China a
young employees are about as likely as all workers to be offered fully formed nationwide retirement system is still some way off
retirement tools such as annual plan statements and online The future shape and affordability of these plans is debated in
tools from their employer though it is concerning that 24 do all of the sur vey countries to var ying degrees
not know if such tools are available or not Those provided are
considered helpful Younger workersrsquo views on reform are important because
changes to government retirement benefits are more likely
The role of government to affect them than any other part of the working population
The generosity of government retirement benefits varies The main concern cited by 57 is of facing less generous
considerably in the countries sur veyed In some countries such government retirement benefits than those enjoyed by their
as France government benefits are the primar y mechanism parentsrsquo generation
for funding retirement while in the United Kingdom they are
The Young Pragmatic and Penniless Generation | 24
The government should reduce the overall cost of state pension provision by
reducing the value of Donrsquot know individual pension plans
25 22
4 The government should not do anything State pension provision will
remain perfectly affordable in the future
28
21 The government should increase overall funding
available for the state pension through
raising taxes
The government should take a balanced approach with some reductions in individual payments and
some increases in tax
Chart 18 Young workers think that the government retirement system will need to be reformed Q With the cost of government retirement benefits becoming a greater concern as people live longer which
if any of the following do you think the government should undertake
Base 20-29 year olds
The younger generation believes that the government cannot What do young employees look for in a retirement product continue to provide as it does now ndash just 4 think government The sur vey findings show that young employees have
benefits will remain affordable to society However there is no reser vations about employer and government retirement
consensus on what governments should do to reform retirement benefits So what then do they want from a private savings
plan systems Over a fifth (22) think retirement entitlements product The savings product feature most valued by younger
should be cut just over a fifth (21) think governments should workers is protection against investment risk (Char t 19)
raise taxes and more than a quarter (28) think a mixture of This may be in the form of no loss of initial investment a
the two is the best solution Another quarter admits that they guaranteed income stream or protection against inflation
donrsquot know what should be done This is reasonable ndash the initial investment of those farthest
from retirement is most at risk However less consideration
is given to savings grow th through investment returns This
suggests that there is an oppor tunity to educate young
workers about the trade-off between returns and risk
management and what they stand to gain
25 | The Young Pragmatic and Penniless Generation
Chart 19 Products which protect against investment risk are the most important to young workers ( interested) Q Thinking about the types of financial products you could purchase to help provide you with security in retirement on a scale of 1 to 5
how interested are you in the following options
Base 20-29 year olds
A product providing a guaranteed retirement income stream or lifetime income in retirement 82
A product which protects my retirement income against inflation 81
A product which guarantees that I donrsquot lose my initial investment 81
A product which helps meet the cost of long-term care if I become unable to look after myself 80
A product which protects my capital from poor investment returns 79
A product which generates a retirement income and allows me to take a lump sum from the investment should I need to 79
A product where the annual management charges are kept low 78
A product which enables me to keep some control over how my savings are invested during my retirement 77
A product which manages the asset allocation so that I am never exposed to a level of risk Irsquom not comfortable with 76
A product which continues to provide a retirement income to my spouse in the event that I die first 75
A product which protects my family against having to pay estate taxes when I die 72
A product which locks in investment returns during the good years 70
The lsquodefined ambitionrsquo retirement system in This removes some of the disadvantages of leaving
the Netherlands a sustainable retirement solution retirement liabilities exclusively up to employers
for young workers (defined benefit) or employees (defined contribution)
In the Netherlands as elsewhere young workers are faced In the Netherlands this is likely to involve legislation which
with an increasing retirement age decreasing government lets retirement funds automatically adjust pay-outs and
suppor t for retirement and declining traditional defined retirement age as life expectancy changes xii
benefit employer retirement plans Reforms proposed
by the Dutch may show a way for ward for all mature and This model has garnered interest elsewhere In the
aging economies United Kingdom Pensions Minister Steve Webb expressed
interest on a more limited scale with a government
rsquoDefined ambitionrsquo proposes that risks are not taken on fully guarantee for a minimum rate of return for defined
by either employer or employee but are shared contribution retirement plans
The Young Pragmatic and Penniless Generation | 26
Recommendations Enabling young workers to save The studyrsquos findings reveal that the majority of young workers (66) are either saving consistently or aspire to start saving but face challenges including debt low pay and funding for significant life events and generational changes to the economic landscape and government and employer support If young people are to achieve a prosperous retirement their willingness to save should be met with better opportunities to save Here is what can be done by employers governments and young people themselves to address retirement planning concerns for younger adults
27 | The Young Pragmatic and Penniless Generation
Individuals Employers and governments
Determine how much income you need in retirement Auto-enroll employees into a workplace retirement plan Young people accept the need to save for retirement but donrsquot If an auto-enrollment workplace retirement plan is feasible
know how to act on that need They can become more retirement this can play a major role in getting young workers saving early
savvy simply by talking to friends and family (as do 24 of and regularly Combined with auto-escalation (the automatic
our respondents already) or employers going online to use annual increase in retirement plan contributions) and matching
retirement calculators or reading the personal finance media contributions it can lead to greater retirement readiness
Seek out a financial advisor Provide more flexible savings products through the workplace Young people are faced with life events that make it easy to Not all savings journeys start with a retirement plan particularly
feel overwhelmed by financial priorities in addition to retirement for young people who may think of retirement as lsquotoo far awayrsquo
planning Soliciting advice from a finance professional early in Employers can kick-start the savings habit in younger workers
life (17 of young employees have done so already) helps with by providing flexible easy to access and easy to understand
planning and priorities and making sense of long-term finances savings plans as a more attractive starter option
Start saving now and save consistently Make company retirement plans more portable As with all employees young people will strengthen their Young people move jobs much more often than previous
retirement readiness simply by saving regularly Today only 25 generations of employees so savings like DC retirement plans
of young people always save yet even small regular amounts need to follow employees when they change jobs
will improve retirement readiness over time
Make tax incentives more effective Ask your employer about workplace retirement savings plans All countries encourage long-term savings through tax relief but
and other retirement benefits young people often arenrsquot aware of this or donrsquot understand it
While one third (33) of young people believe that a workplace A more targeted system of tax relief could help provide clearer
retirement savings plan provides a major opportunity to start and simpler signals to younger people about the financial
saving employers often experience difficulties in engaging benefits of long-term saving
younger employees in discussions about retirement planning
The workplace is an important channel for achieving retirement Make better financial education central to the workplace readiness so be sure to max out on any employer contributions retirement offer
Young people who aspire to save may be prevented from
doing so by setting the wrong financial priorities Workplace
retirement education ndash alongside professional advice ndash can help
guide young people toward the right long-term priorities at an
earlier age in life
The Young Pragmatic and Penniless Generation | 28
29 | The Young Pragmatic and Penniless Generation
Glossary
Aegon Retirement Readiness Index (ARRI) c areer average retirement plan The ARRI assesses the relative levels of retirement A type of defined benefit plan that is based on an
preparedness of employees across different countries on a employeersquos average retirement earnings over the duration
scale from 1 to 10 The Index is based on three questions of plan membership Same as average salary plan
covering attitudes and three questions covering behaviors
defined ambition (DA) plan average salary plan A type of retirement plan in which retirement plan risks
A type of defined benefit plan that is based on an are shared between the employer and the employee
employeersquos average retirement earnings over the duration It offers greater certainty to savers around the final value
of plan membership Same as career average plan of their retirement assets than in DC plans and less
cost volatility for employers than with DB plans In the
a nnuity Netherlands Defined Ambition (DA) retirement plans are
A form of contract sold by life insurance companies that being introduced in order to help relieve the pressure on
guarantees a fixed or variable payment to the annuitant employers while still trying to provide employees with a
at some future time usually retirement All capital in the more secure retirement plan The United Kingdom too is
annuity grows tax-deferred looking at DA retirement plans as a solution
auto enrollment defined benefit (DB) plan An employer-sponsored retirement plan in which the An employer-sponsored retirement plan where the amount
employer is able to enroll an employee without that of future benefits an employee will receive from the plan is
employeersquos express authorization The employer determines defined typically by a formula based on salary history and
what percentage of the employeersquos salary or wages is years of service The amount of contributions the employer
contributed to the plan The employee is able to change is required to make will depend on the investment returns
this percentage and can opt out of enrollment in the plan experienced by the plan and the benefits promised
Contrast defined contribution plan
a uto-escalation A feature of a plan which automatically increases the defined contribution (DC) plan percentage of (retirement) funds saved from salary An employer-sponsored retirement plan such as a 401(k)
This feature generally uses a default or standard plan or a 403(b) plan in the United States in which
contribution escalation rate contributions are made to individual participant accounts
Depending on the type of DC plan contributions may be
B aby Boomers made by the employee the employer or both
A term used to refer to people generally born between
the end of World War II in 1945 and the mid 1960s The employeersquos benefits at retirement or termination of
Other generations Silent Generation - the generation born employment are based on the employee and employer
between 1925 and 1945 Generation X - the generation contributions and earnings and losses on those
born between 1965 and 1979 Millennials or Generation contributions See also 401(k) and 403(b) plan
Y - the generation born between 1980 and 2000 and often Contrast defined benefit plan
classified as the children of Baby Boomers
The Young Pragmatic and Penniless Generation | 30
401(k) plan An employer sponsored retirement plan that enables
employees to make tax-deferred contributions from their
salaries to the plan
403(b) plan An employer-sponsored defined contribution plan that
enables employees of universities public schools and
non-profit organizations to make tax-deferred contributions
from their salaries to the plan
final salary plan A type of defined benefit plan in which retirement
benefits are based on final retirement salary in the years
immediately before retirement benefits are received
Millennials A term used to refer to the people born from about 1980
to 2000 brought up using digital technology They are
often classified as the children of Baby Boomers
r etirement (or pension) plan Provides replacement for salary when a person is no
longer working due to retirement In the case of a defined
benefit retirement plan the employer or union contributes
to the plan which pays a predetermined benefit for the
rest of the employeersquos life based on length of service and
salary Payments may be made either directly or through
an annuity Retirement plan payments are taxable income
to recipients in the year received The employer or union
has fiduciary responsibility to invest the retirement plan
funds in stocks bonds real estate and other assets earn
a satisfactory rate of return and make payments to retired
workers Retirement plan funds holding trillions of dollars
are one of the largest investment forces in the stock
bond and real estate markets If the employer defaults in
the United States retirement plan payments are usually
guaranteed by the Pension Benefit Guaranty Corporation
(PBGC)
variable annuities (VA) An insurance contract in which the insurance company
guarantees a minimum payment at the end of the
accumulation period The payments may vary depending
on the financial performance of the managed portfolio
31 | The Young Pragmatic and Penniless Generation
About Aegon Transamerica Center for Retirement Studiesreg and Cicero Consulting
Aegon Transamerica Center Aegon is an international life insurance pensions and asset reg management company with businesses in over 20 markets for Retirement Studies in the Americas Europe and Asia Aegon companies employ The Transamerica Center for Retirement Studiesreg (TCRS) is
around 24000 people and serve millions of customers a division of the Transamerica Institute a nonprofit private
worldwide foundation TCRS is dedicated to educating the public on
wwwaegoncom emerging trends surrounding retirement security in the
United States TCRSrsquo research emphasizes employer-sponsored
In 2010 Aegon became a founding member of the Global retirement plans issues faced by small to mid-sized companies
Coalition on Aging which seeks to raise awareness of aging and their employees and the implications of legislative and
issues among policymakers and the general public A major aim regulatory changes Transamerica Institute is funded by
of the coalition is to transform the way we think and speak contributions from Transamerica Life Insurance Company and
about aging replacing the familiar rhetoric of lsquoproblemsrsquo with its affiliates and may receive funds from unaffiliated third-
a more positive discussion of lsquopossibilitiesrsquo and lsquoopportunitiesrsquo parties For more information about TCRS please refer to
wwwglobalcoalitiononagingcom wwwtransamericacenterorg
Cicero Consulting A leading consultancy firm serving the banking insurance and
asset management sector Cicero specializes in public policy
and communications consulting as well as global thought
leadership and independent market research Cicero was
established in 2001 and now operates from offices in London
Brussels Washington and Singapore As a market leader in
pensions and retirement research Cicero designed
and analyzed the research and contributed to the report
wwwcicero-groupcom
The Young Pragmatic and Penniless Generation | 32
Marta acebo Mark Green Patricia Plas
Paula alvarez douGlas henck scott roane
Frits bart wendel hoFMan thurstan robinson
Grace basile
lynette belFry
andrew berwick
Frans van der horst
tatsuo kai
herMan kaPPelle
Patti rowey
sarah russell
Joost van schaGen
robin boon Gaacutebor kePecs dick schiethart
bert-JaaP brons Marco keiM erik schouten
douG brooks
libby buet
kent callahan
JaiMe kirkPatrick
bas knol
roGer koch
anGela seyMour Jackson
kate sMith
renske stoker
Jeanne de cervens
dana chen
Peter kunkel
alexander kuiPers
eyleen sun
MartiJn tans
arkadiusz chMurzynski
heidi cho
brian lewis
Mike linder
GreG tucker
Mark twiGG
siMon clow siMon luke catherine wanG
robert colliGnon Jason Ma Marc van weede
catherine collinson GrzeGorz Mathea tiM willaert
wendy daniels
Michel denizot
edit drevenka
Paul Middleton
takaoh MiyaGawa
david Moulton
daniel wriGht
alex wynaendts
MacieJ zaPala
Jan driessen
kelly Fu
adrian Grace
Mark Mullin
Marcelle noltenius
stiG nybo
Peacuteter zatykoacute
vicky zeldin
Disclaimer This repor t contains general information only and does
not constitute a solicitation or offer No rights can be
derived from this repor t Aegon its par tners and any of
their affiliates or employees do not guarantee warrant
or represent the accuracy or completeness of the
information contained in the repor t
Acknowledgements
33 | The Young Pragmatic and Penniless Generation
References and notes i For a comparison of different retirement systems see lsquoPensions at a Glance 2011rsquo OECD 2011 ii As the survey was carried out online the survey results in China are based toward people living in urban areas iii ldquoPensions Marketsrdquo TheCityUK March 2013 p9 iv Global Employment Trends for Youth 2013 A generation at risk International Labour Organisation 2013 p2 v Eurostat July 2013 vi OECD Employment and Labour Markets Key Tables from OECD No 2 2012 vii The Federal Reserve Bank of New York 2012 Quarterly Report on Household Debt March 29 2013 viii World Bank ix lsquoWorld-class povertyrsquo The Economist February 27 2013
httpwwweconomistcomblogsanalects201302chinas-poor x lsquoThe Chinese slow down in char tsrsquo The Economist July 15 2013 xi lsquoChina rsquos welfare system difficult inflexible and blatantly unfairrsquo The Guardian April 23 2013
httpwwwtheguardiancomglobal-development2013apr23china-welfare-system-inflexible-unfair xii lsquo The Dutch experience with Defined Ambition pensions and the impact on companiesrsquo Aegon Global Pensions March 12 2013
httpwwwaegonglobalpensionscomenHomePublicationsNews-archiveNewsThe-Dutch-experience-with-Defined
Ambition-pensions-and-what-that-may-mean-for-companies-in-the-Netherlands-and-the-UK
shy
The Young Pragmatic and Penniless Generation | 34
Contact information HE ADQUARTER S
Aegon NV
PO Box 85
2501 CB The Hague
Telephone +31 70 344 32 10
w w waegoncom
MEDIA REL ATIONS
Telephone +31 70 344 89 56
Email gcc-iraegoncom
Countr y Index score
Germany 548
China 541
Canada 524
United States 519
The Netherlands 488
United Kingdom 486
Sweden 483
France 475
Hungar y 473
Poland 463
Spain 440
Japan 430
Total 489
Appendix 1 Aegon Retirement Readiness Index (ARRI) - technical note
Aegon Retirement Readiness Index (ARRI)-technical note 2013 Weightings (2012 in brackets) A sample of 12000 pre and post retirees was drawn from 1 Personal responsibilit y 20 (30)
twelve countries Of these 10800 (90) were pre-retirees 2 Level of awareness 30 (35)
and these were chosen for fur ther analysis of their plans 3 Financial capability Understanding 30 (25)
for retirement The Index that was developed forms an 4 Retirement planning 50 (50)
assessment of how well an individual perceives the adequacy 5 Financial preparedness 60 (60)
of his her own finances and financial awareness specifically 6 Income replacement 35 (35)
for addressing his retirement needs
Note that the weights devised to show the relative
The lsquotargetrsquo for the Index impor tance of each question in calculating the Index add to
The question on current savings activity was designated as the 225 These were then re-scaled so that a final scale of 1 to
target question (dependent variable) for predicting the level of 10 was calculated
preparedness for retirement Responses to this question were
then correlated with each of the six key questions (variables) Final scores by country below to understand which were driving the activity These weightings were multiplied by the actual scores for each
This was done because it was not felt to be correct to give respondent for each of the six Index questions and aggregated
each of the six variables described below an equal weight as to obtain a provisional score This was then adjusted to
they appeared to have quite different relationships to the give countr y scores out of 1 to 10 (A score of 1 to 10 had
target question sufficient differentiation to be used as the scale for analysis)
1 Personal responsibilit y for income in retirement
2 Level of awareness of need to plan for retirement
3 F inancial capability Understanding of financial matters
regarding plans for retirement
4 Retirement planning Level of development of plans
5 Financial preparedness for retirement
6 Income replacement Level of projected income replacement
The weighting To estimate the statistical significance of the decline in overall
scores in this yearrsquos Index is theoretically incalculable
Two things have changed from 2012 to 2013
1 C anada and China have joined the sample
2 The new countries have thus influenced the weights of
emphasis placed on the 6 variables used to calculate
the score hence the weights attached to the complex
calculation have changed
However it is noticeable that for countries which were sampled
in both time periods the mean scores for the six individual
variables have almost invariably declined and on average more
than half of them have shown a significant level of decline
In particular the question lsquoDo you think you will achieve this
incomersquo has for all countries shown a significant level of
decline We thus hypothesize that the comparative results
show a significant decline
The Young Pragmatic and Penniless Generation | 36
Net
herl
ands
Net
herl
ands
Net
herl
ands
Ger
man
yG
erm
any
Ger
man
yBase 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
Better off 7 4 23 Sw
eden
Swed
en11 5 7 8 3 11 14 50 5
Swed
en
About the same 19 18 27 23 8 19 18 13 29 29 24 21 U
ntie
dU
ntie
dU
nite
d Worse off 66 74 41 58 79 69 71 76 51 47 21 55
Kin
gdom
Kin
gdom
Kin
gdom
Donrsquot know 9 3 9 9 9 4 4 8 9 10 6 19
Fran
ceFr
ance
Fran
ce
Chart 2 Education of 20 ndash 29 year olds by country Q Please choose from the following list the highest level of educational or professional qualification you have
Spai
nSp
ain
Spa
in
Pol
and
Pol
and
Pol
and
Hun
gary
Hun
gary
Hun
gar y
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
dU
nite
d 100 100 100 100 100 100 100 100 100
Stat
es100 100 100
Stat
esSt
ates
Less than high school graduate 2 44 6 14 1 3 2 7 1 3 Ca
nada
Cana
daC
anad
aHigh school graduate 11 33 53 23 22 22 4 41 14 21 1 2
Some college or trade school 46 2 9 9 9 19 37 14 28 20 4 33 Ch
ina
Chin
aC
hina
College degree University degree 31 15 27 30 41 43 21 33 50 46 9 57
Postgraduate degree or 8 3 3 23 25 11 36 1 8 9 80 6 qualification Ja
pan
Japa
n Ja
pan
Other 2 4 1 1 1 2 0 5 0 6 2
None 0 1 1 0 1 0 0
NET Less than undergrad degree 61 82 70 47 34 46 43 66 42 45 11 37
NET Undergrad degree or higher 39 18 30 53 66 54 57 34 58 55 89 63
Chart 3 Aegon Retirement Readiness Index scores for young employees by country
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
NET Low Index (0-5) 80 64 79 81 85 78 81 73 65 61 61 87
NET Medium Index (6-7) 15 30 18 15 14 21 17 23 25 31 31 12
NET High Index (8-10) 4 6 3 3 1 2 2 4 10 8 7 1
Appendix 2 Country comparisons Chart 1 The majority of young employees believe that they will be worse off in retirement compared to their parents Q Do you think that future generations of retirees will be better off or worse off than those currently in retirement
37 | The Young Pragmatic and Penniless Generation
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsI always make sure that 27 34 27 26 17 14 19 22 35 33 32 20 I am saving for retirement
I only save for retirement G
erm
any
Ger
man
y21 27 20 13 17 21 16 6 17 24 20 24 occasionally from time to time
I am not saving for retirement now 6 11 8 11 5 15 9 4 10 8 9 5 although I have in the past Sw
eden
Swed
en
I am not saving for retirement 35 23 34 46 53 40 49 54 36 33 38 46 though I do intend to U
nite
dU
ntie
dK
ingd
omK
ingd
om I have never saved for retirement and 11 6 10 5 8 10 6 13 3 2 1 6 donrsquot intend to
Fran
ceFr
ance
Chart 5 Younger people are more likely not to be using any means of retirement savings Sp
ain
Spai
nQ Which financial means if any are you currently using to prepare for your retirement
Pol
and
Pol
and
only asked in Germany only asked in Spain
Hun
gary
Hun
gary
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
dSt
ates
Stat
es100 100 100 100 100 100 100 100 100 100 100 100
Defined benefit plan 16 10 25 29 15 3 76 11 20 13 5 Ca
nada
Cana
daDefined contribution plan 28 10 17 19 19 14 10 23 40 7 3
Private pension 8 18 14 10 5 9 4 13 12 40 66 4 Ch
ina
Chin
a Government pension social security 12 43 14 21 8 7 4 18 27 33 71 35
Stocks 5 12 14 7 4 17 7 2 13 10 23 9
Bonds 1 8 5 6 2 16 4 2 8 13 14 3 Ja
pan
Japa
n
Mutual funds 2 14 23 4 2 10 3 4 7 16 9 6
Investment insurances (annuities) 2 3 2 3 2 9 4 5 2 4 6 1
Savings accounts 23 37 38 25 23 6 29 15 36 37 65 36
Investment property 2 10 6 7 9 2 5 2 5 11 18 1
Employee stock purchase 1 1 1 4 1 29 0 4 1 7 1
My home 10 5 8 7 7 8 4 6 6 14 30 1
Reverse mortgage 1 4 2 4
My business 2 1 3 2 2 4 1 1 2 4 12 1
Inheritance 3 11 7 11 7 9 9 8 7 9 6 2
Annuities 1 15 2 2 1 4 3 2 1 2 8
Long-term care insurance 2 1 3 2 9 5 1 6 4 7 1
Life insurance 6 11 8 8 14 3 18 15 19 18 36 17
Unterstuumltzungskasse aus 2 Eigenmitteln finanziert
Unterstuumltzungskasse vom 2 Arbeitgeber finanziert
Chart 4 Younger employees are much more likely to aspire to save for retirement Which of the following best explains your approach to saving for retirement This can include money you contribute to any long-term
investment including pensions stocks and shares investment-linked insurances property etc
Q
The Young Pragmatic and Penniless Generation | 38
Plan de empleo mixto 2 (combinacioacuten de las dos anteriores)
Other 1 6 4 0 1 2 2 3 2 2 3 3
None nothing 8 14 12 23 25 31 6 27 21 17 3 24
Donrsquot know 29 6 17 13 19 8 4 9 7 7 0 9
hart 6 The younger generation has more negative associations of retirement Which if any of the following words do you most associate with retirement
Net
herl
ands
Net
herl
ands
Ger
man
yG
erm
any
Swed
enSw
eden
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
d100 100 100 100 100 100 100 100 100 100 100 100
Kin
gdom
Kin
gdom
Freedom 35 32 36 39 19 26 11 20 35 40 37 33
Opportunity 7 27 25 18 4 8 9 10 17 16 9 16 Fr
ance
Fran
ceLeisure 58 48 36 41 23 24 43 32 50 50 55 6
Excitement 2 5 3 8 2 6 1 2 17 17 4 3 Sp
ain
Spai
nPoverty 11 26 23 11 26 14 37 44 7 5 6 20
Insecurity 34 24 18 16 20 18 35 56 10 9 18 44 P
olan
dP
olan
dLoneliness 4 10 17 16 12 7 11 8 5 9 20 12
Ill health 2 19 7 14 15 9 49 23 6 6 29 11 H
unga
ryH
unga
ryDependent on others 11 11 5 18 14 8 18 19 14 6 11 4
Tired 3 4 8 10 14 10 17 6 7 7 13 19 U
nite
dU
nite
dFar away 38 19 25 21 61 32 2 13 33
Stat
es33 14 22
Stat
es
Boredom 14 16 6 12 16 12 15 8 12 12 16 17 Ca
nada
Cana
daEnjoyment 21 16 17 23 14 29 5 3 37 37 35 15
None of the above 0 1 1 2 0 2 1 1 2 2 1 2
Donrsquot know 2 2 3 3 2 2 1 2 0 Ch
ina
6 Ch
ina
hart 7 Many young employees think they are not on course to achieve target retirement income Ja
pan
Japa
n Do you think you will achieve this income [your estimated income needed in retirement]
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
I donrsquot know if I am on course to 56 37 57 59 50 39 49 48 48 41 22 68 achieve my retirement income
No I am on course to achieve around one-quarter (25) of my 10 14 9 13 15 14 14 13 10 10 10 7 retirement income
No I am on course to achieve around 12 20 14 11 19 19 18 15 12 11 23 12 half of my retirement income
No I am on course to achieve around three-quarters (75) of my 8 14 7 4 8 15 9 8 6 11 20 5 retirement income
Yes I am on course to achieve my 15 15 13 14 8 13 11 17 25 27 25 8 retirement income
CQ
CQ
39 | The Young Pragmatic and Penniless Generation
Chart 8 Young people in most countries expect to retire before 65 Q At what age do you expect to retire from all paid employment
Net
herl
ands
Ger
man
y
Swed
en
Uni
ted
Kin
gdom
Fran
ce
Spai
n
Pol
and
Hun
gary
Uni
ted
Stat
es
Cana
da
Chin
a
Japa
n
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
40 or under 0 1 1 0 0 1 3 1 5 12
41-50 1 2 3 5 2 2 6 3 9 4 37 9
51-59 4 4 4 6 2 4 11 5 7 10 30 1
60 5 11 8 12 10 13 19 12 12 16 21 27
61-64 2 11 10 2 20 7 4 13 5 3 1 2
65 17 22 44 31 34 32 16 26 26 32 3 25
66-69 42 32 15 9 12 29 20 13 9 9 0 1
70 19 11 10 18 10 5 10 9 13 12 0 6
71+ 5 5 5 9 4 5 5 3 7 5 1 4
Never 2 1 1 2 2 2 6 4 1 0 0
Donrsquot know 2 3 2 5 3 2 8 9 5 5 1 13
Mean 67 65 65 65 64 65 63 64 63 64 53 59
Median 67 65 65 65 65 65 65 65 65 65 55 60
Chart 9 Younger employees feel they donrsquot have money to invest for retirement Q What is the single biggest obstacle to you saving for retirement right now
Net
herl
ands
Ger
man
y
Swed
en
Uni
ted
Kin
gdom
Fran
ce
Spai
n
Pol
and
Hun
gary
Uni
ted
Stat
es
Cana
da
Chin
a
Japa
n
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
The uncertain economic environment 19 8 13 9 13 19 11 14 12 9 29 27
Lack of money to invest 28 41 33 43 47 34 48 55 47 50 6 19
Fear of poor investment returns over the coming years 2 5 10 7 5 6 8 2 6 8 14 6
Complexity of investment products 4 4 4 3 5 3 5 2 12 5
I donrsquot know how to go about investing for the long-term 2 3 10 8 5 5 3 3 6 8 7 9
The fees charged by financial services companies 2 4 4 2 4 3 4 2 3 5 2 5
I canrsquot afford to take financial advice 3 3 6 8 2 4 3 5 3 2 3 2
I donrsquot trust the financial services industry 12 11 8 6 5 10 6 2 2 3 5 4
I donrsquot see the need to save for the long-term 6 1 2 2 3 3 3 1 2 1 4 3
Concerns about unstable currencies currency fluctuations 2 5 1 3 3 3 4 3 4 5 15 2
Other (PLEASE STATE) 3 3 1 1 3 2 4 6 2 2 1
Donrsquot know 17 12 11 7 8 6 3 6 8 6 3 17
The Young Pragmatic and Penniless Generation | 40
Chart 10 More money would incentivize young employees to save for retirement Q Which if any of the following would encourage you to save for retirement
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsMore generous tax breaks on long-term savings and pensions 20 44 30 32 27 23 42 42 33 43 40 32 products
Ger
man
yG
erm
any
Access to financial education so that I am more aware of what 24 6 14 21 16 22 21 12 23 24 43 25 I need to do for myself
Swed
enSw
eden
Access to professional financial advice so that I have personalized
Uni
ted
20 24 23 23 15 21 25 9 22 23 44 13 U
nite
drecommendations on what steps
Kin
gdom
Kin
gdom
I need to take
Simpler investment products that 12 33 19 28 20 Fr
ance
18 27 16 32 28 36 10 Fr
ance
I can understand with less jargon
Better and more frequent information about my retirement 16 28 20 27 27 23
Spai
n20 18 25 31 45 22
Spai
nsavings
Better legal protection in case I am 12 18 13 18 10 24 18 13 13 19 21 6 P
olan
dP
olan
dsold the wrong product
A pay rise 46 54 44 64 55 50 70 72 67 64 53 37
A better retirement plan pension H
unga
ryH
unga
ry27 32 25 33 29 26 42 35 39 44 33 32 match from my employer
Other 4 2 1 1 2 2 3 3 2 U
nite
d3 0
Uni
ted
Stat
esSt
ates
Donrsquot know 17 9 16 10 10 12 3 8 8 5 3 17
Not applicable - I already have 3 3 4 2 2 1 1 1 2 2 3 sufficient savings Ca
nada
Cana
da
Chin
aCh
ina
Chart 11 A majority of younger employees do not have a written plan for retirement Q Which of the following best describes your retirement planning strategy
Japa
n Ja
pan
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
I have a written plan 7 18 10 9 6 8 6 5 13 10 8 4
I have a plan but it is not written 24 47 37 25 23 31 29 31 37 44 55 24
down
I do not have a plan 61 32 51 61 62 55 62 58 45 42 34 61
Donrsquot know 7 3 3 5 8 6 3 6 4 4 3 12
41 | The Young Pragmatic and Penniless Generation
Chart 12 For young employees friends and family are the leading source of retirement savings information Q And which of these sources (of information) is most important to you
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
Bank adviser 6 11 19 5 25 5 7 4 3 17 10 2 N
ethe
rlan
dsN
ethe
rlan
dsProfessional financial adviser 12 22 10 12 10 19 19 22 21 25 19 10
Insurance agent spokesperson 3 10 2 3 1 3 6 2 3 0 3 2 G
erm
any
Ger
man
yInsurance company website 3 1 3 2 4 4 2 2 1 3 1
Personal finance websites online 8 5 7 8 5 4 10 8 12 6 10 8 retirement planning tools Sw
eden
Swed
enPersonal finance media 2 2 2 2 2 6 3 1 2 1 6 2
Government website 7 1 3 6 U
nite
d5 2 3 3 2 3 7 1
Uni
ted
Kin
gdom
Kin
gdom
Bank website 2 3 3 2 1 0 3 2 1 6 3 3
My employer 12 8 4 9 4 7 5 12 8 5 4 1 Fr
ance
Fran
ceAccountant 2 6 4 4 1 3 1 3 5 5 1 3
Lawyer 2 3 1 2 2 8 4 2 1 2 2 0 Sp
ain
Spai
nFriends and family 21 22 30 28 24 26 18 24 26 20 25 24
None of these P
olan
dP
olan
dNot applicable 21 7 16 18 19 13 17 15 14 9 5 41
Hun
gary
Hun
gary
Chart 13 Most young workers feel their employer should provide some kind of pension Q In the future what if anything should employers do to help people plan for retirement
Uni
ted
Uni
ted
Stat
esSt
ates
Cana
daCa
nada
Chin
aCh
ina
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 Ja
pan
Japa
n Employers should be required to 24 43 20 40 21 26 20 28 37 34 20 30 contribute to workersrsquo pensions
Employers should be required to make a pension available but not to 12 13 7 17 20 15 15 4 11 14 22 5 contribute into it
Employers should not be required to provide pensions but should 15 9 12 8 9 8 11 6 11 9 9 11 provide information on how to plan for retirement
Employers should provide a range of flexible benefits and 13 18 18 16 15 27 25 28 21 22 45 12 allow individuals to choose which benefits they actually want
Nothing ndash it should be left to individual employees to take care 2 2 5 1 4 3 3 5 6 5 1 9 of themselves
Nothing ndash it should be left to the government to take care of its 2 5 5 2 5 8 15 14 1 4 0 4 citizens
Donrsquot know 30 10 32 17 27 12 12 15 13 13 3 29
The Young Pragmatic and Penniless Generation | 42
Chart 14 Workplace pensions are relatively low down in young workersrsquo priorities when choosing a job Q How important to you would the following workplace benefits be if you were choosing your next job
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsBasic salary 86 93 88 91 88 92 90 94 90 93 96 94
Holiday entitlement 87 94 89 91 92 94 91 94 93 94 96 91 G
erm
any
Ger
man
yOvertime and bonus pay 86 93 87 88 89 90 89 94 90 91 97 90
Location of workplace 88 91 86 92 89 90 89 92 93 93 92 86 Sw
eden
Swed
enMedical health insurance 73 92 84 65 86 87 88 87 93 94 98 83
Opportunities for career progression 86 91 81 90 90 94 91 94 92 91 96 81 U
nite
dU
nite
dAccess to a workplace retirement 85 85 81 82
Kin
gdom
78 84 80 78 84 86 93 74 K
ingd
omplan with employer contributions
Access to good training provision 85 87 85 88 86 91 85 93 86 90 95 74 Fr
ance
Fran
ceFlexible working hours 79 87 58 86 81 89 81 87 91 91 92 57
Life insurance 72 75 79 69 80 82 Sp
ain
84 80 81 88 93 74 Sp
ain
(death in service benefits)
Phased retirement or other employer programs providing for 74 54 75 71 72 81 76 74 76 81 91 65
Pol
and
Pol
and
a transition into retirement
Ability to work past the normal 68 57 64 65 64 74 72 65 74 76 80 70 retirement age H
unga
ryH
unga
ry
Access to a workplace retirement 62 74 61 68 59 77 61 47 68 74 89 65 plan without employer contributions U
nite
dU
nite
dSt
ates
Stat
esEmployee share plans 50 72 54 65 59 73 61 51 64 73 91 55
Access to creche help with the 67 75 64 56 69 79 75 83 58 69 89 68 cost of childcare Ca
nada
Cana
da
Opportunities for foreign travel 53 54 60 55 50 71 58 66 57 61 79 37
Company car 51 46 45 47 49 63 51 49 36 49 69 Ch
ina
39 Ch
ina
Japa
n Ja
pan
Chart 15 Young workers think the state pension will need to be reformed Q With the cost of government pensions becoming a greater concern as people live longer which if any of the following do you think
the government should undertake
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
The government should reduce the overall cost of state pension 15 33 16 15 16 20 28 22 21 26 30 16 provision by reducing the value of individual pension plans
The government should increase overall funding available for the 12 21 30 22 14 34 19 26 21 18 29 10 state pension through raising taxes
43 | The Young Pragmatic and Penniless Generation
he government should take a alanced approach with some 27 26 12 30 28 23 24 16 34 31 38 41 eductions in individual payments nd some increases in tax
he government should not do nything State pension provision 7 2 12 5 3 4 3 3 5 4 0 5 ill remain perfectly affordable in he future
onrsquot know 38 19 29 29 39 20 26 34 19 21 4 28
Net
herl
ands
art 16 Products which protect against investment risk are the most important to young workers ( interested) Thinking about the types of financial products you could purchase to help provide you with security in retirement on a scale of 1 to 5
how interested are you in the following options G
erm
any
Swed
en
Uni
ted
Kin
gdom
ase 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 Fr
ance
100 100 100 100 100 100 100 100 100 100 100 100
product providing a guaranteed etirement income stream or 75 81 73 76 74 83 78 76 87 85 94 69
Spai
nifetime income in retirement
product which protects my 74 79 73 76 72 82 77 74 84 86 94 65 etirement income against inflation P
olan
d
product which guarantees that I 72 82 73 78 75 81 76 73 86 86 90 67 onrsquot lose my initial investment H
unga
ry product which helps meet the ost of long-term care if I become 74 79 74 77 70 79 76 71 86 85 84 66
Uni
ted
nable to look after myself St
ates
product which protects my capital 71 81 71 76 68 76 77 73 84 83 93 65 rom poor investment returns Ca
nada
product which generates a etirement income and allows 69 78 71 75 68 81 77 72 84 86 94 70 e to take a lump sum from the
Chin
anvestment should I need to
product where the annual 66 78 68 75 72 79 77 70 85 86 87 64 anagement charges are kept low Ja
pan
product which enables me to eep some control over how my 71 73 70 75 72 80 75 69 88 85 91 63 avings are invested during my etirement
product which manages the sset allocation so that I am never 68 70 67 73 66 76 71 67 80 83 95 60 xposed to a level of risk Irsquom not omfortable with
product which continues to rovide a retirement income to my 74 78 71 75 73 81 79 73 86 82 94 60 pouse in the event that I die first
product which protects my family gainst having to pay estate taxes 73 76 71 74 75 81 75 69 82 82 89 56 hen I die
product which locks in investment 72 71 63 73 64 71 59 56 81 84 89 61 eturns during the good years
Tbra
Tawt
D
ChQ
B
Arl
Ar
Ad
Acu
Af
Armi
Am
Aksr
Aaec
Aps
Aaw
Ar
The Young Pragmatic and Penniless Generation | 44
Chart 13 More money would incentivize young employees to save for retirement Q Which if any of the following would encourage you to save for retirement
Base 20-29 year olds
57 A pay rise
More generous tax breaks on long-term savings and pensions products
34
A better retirement plan pension match from my employer
33
Better and more frequent information about my retirement savings 26
Simpler investment products that I can understand with less jargon 24
Access to professional financial advice so that I have personalized recommendations on what steps I need to take 23
Access to financial education so that I am more aware of what I need to do for myself 22
Better legal protection in case I am sold the wrong product 16
Other 2
Not applicable - I already have sufficient savings 2
Donrsquot know 10
Chart 14 Very few younger employees have a written plan for retirement Q Which of the following best describes your retirement planning strategy
Base 20-29 year olds
5 Donrsquot know I have a
written plan
8
34 I have a plan but it is not
52 written down
I do not have a plan
Turning to incentives greater remuneration predictably tops a list Retirement planning of what would encourage 20-29 year olds to save for retirement Retirement planning is essential to adequate retirement saving
More tellingly a third (33) would like their employer to provide although it is somewhat lacking in todayrsquos younger employees
a better retirement plan into which both parties contribute Over half (52) have no retirement planning strategy at all
Better information and simple products would also help more and only 8 have noted down their retirement strategy
people to save A quarter (26) would be encouraged to save by
better and more frequent information about retirement savings Nevertheless the respondents polled believe that the current
while a similar number (24) want simple investment products global economy makes retirement planning increasingly
that are easy to understand As with the previous question a important ndash 71 agreed with this statement It is clear from this
lack of investment knowledge and the complexity of investment that young people between the ages of 20 and 29 do not lack
products are revealed as obstacles to savings the will to save they lack the opportunity
The Young Pragmatic and Penniless Generation | 20
Part 4 Creating the right conditions for young employees to save How may young employeesrsquo obstacles to saving be overcome For retirement readiness this will be a defining question of the early twenty-first centur y ndash and an extremely challenging one given the number of serious issues affecting younger employeesrsquo finances What was learned in the previous chapter about encouraging young employees to save is a start This chapter examines which areas and triggers to saving can be unlocked and whether government employer or individual should take most responsibility
21 | The Young Pragmatic and Penniless Generation
Friends and family
Professional financial adviser
17
24
Bank adviser 9
Personal finance websites online retirement planning tools
My employer
Government website
4
8
7
Insurance agent spokesperson
Accountant
3
3
Personal finance media 3
Lawyer
Bank website
3
2
Insurance company website
Donrsquot know
2
15
Information and advice on retirement saving strong theme revealed by our findings is that younger This finding is remarkably consistent across the countries
mployees want more information on savings products and sur veyed despite significant differences in market makeup
etter access to advice The largest share 24 (compared although some differences exist For instance a quar ter
o 17 for all employees) finds friends and family to be the (25) of young employees in France turn to bank advisers
ost important source of advice followed by professional for financial information nearly triple the number among all
dvisers (17) and bank advisers (9) That young employees young people (9)
urn to friends and family first suggests an unmet need for
rofessional financial advice This is both a challenge and an
pportunity for the financial ser vices sector
hart 15 For young employees friends and family are the leading source of retirement savings information Which of these sources (of information) is most important to you
ase 20-29 year olds
A
e
b
t
m
a
t
p
o
CQ
B
What is the role of the workplace in retirement planning Does this influence what retirement benefits younger
In response to shifting employment patterns todayrsquos younger employees expect from their workplace Certainly a majority
employees are less loyal to their employers than older workers favor workplace retirement plans with 61 believing that these
Fully 39 of 20-29 year olds are planning to look for a new job should be a fundamental part of pay (although this is lower
in the next 12 months compared to 29 of all workers and than for employees overall) and just 4 feel that retirement
31 frequently think about quitting their jobs Strikingly while planning should be left entirely to individuals
53 of all workers plan to stay with their current employer
until retirement just 37 of 20-29 year olds say this However there is evidence of a slight shift in perceptions
Younger workers are less likely to want workplace retirement
Doubtless much of this is because younger workers are more plans over other factors Of those who want employer
mobile and have more opportunities Another trigger to lower retirement plan contributions only 46 wanted this even if
employer loyalty may be the expectation of holding more jobs it reduced benefits and 35 (compared to 43 of all workers)
and even pursuing multiple careers over a working lifetime if it cut jobs
The Young Pragmatic and Penniless Generation | 22
Donrsquot know Employers should be
required to contribute to workersrsquo pensions
5 Nothing ndash it should be left to the government to take 18
care of its citizens 28
4 Nothing ndash it should be left to individual employees to
take care of themselves
13
22
Employers should provide a range of flexible benefits
and allow individuals to choose which benefits they
actually want
10 Employers should
be required to make a pension available but not
to contribute into it
Employers should not be required to provide pensions but should
provide information on how to plan for retirement
Chart 16 Most young workers feel that their employer should provide some kind of pension Q In the future what if anything should employers do to help people plan for retirement
Base 20-29 year olds
Are other workplace benefits more important Younger workers were asked to rate the importance of various workplace benefits The results reveal how highly they value the
elements of their compensation package Chart 17 shows that 87 of young employees believe a workplace retirement plan with
employer contributions would be an important factor when choosing their next job While retirement may be decades away for
twentysomethings 80 believe programs provide for a phased retirement are important
23 | The Young Pragmatic and Penniless Generation
Basic salary 94
93 Holiday entitlement
91 Overtime and bonus pay
91 Location of workplace
88 Medical health insurance
87 Opportunities for career progression
Access to a workplace retirement plan with employer contributions 87
Access to good training provision 86
Flexible working hours 85
Life insurance (death in service benefits) 81
Phased retirement or other employer programs providing for a transition into retirement 80
Ability to work past the normal retirement age 70
Access to a workplace retirement plan without employer contributions
67
Employee stock plans 65
Access to creche help with the cost of childcare 59
Opportunities for foreign travel 50
Company car 43
Chart 17 Workplace retirement plans are a relatively low priority for younger workers when choosing a job How important to you would the following workplace benefits be if you were choosing your next job
ase 20-29 year olds
Q
B
Regarding workplace benefits provided by employers today considered just enough to fulfill basic needs and in China a
young employees are about as likely as all workers to be offered fully formed nationwide retirement system is still some way off
retirement tools such as annual plan statements and online The future shape and affordability of these plans is debated in
tools from their employer though it is concerning that 24 do all of the sur vey countries to var ying degrees
not know if such tools are available or not Those provided are
considered helpful Younger workersrsquo views on reform are important because
changes to government retirement benefits are more likely
The role of government to affect them than any other part of the working population
The generosity of government retirement benefits varies The main concern cited by 57 is of facing less generous
considerably in the countries sur veyed In some countries such government retirement benefits than those enjoyed by their
as France government benefits are the primar y mechanism parentsrsquo generation
for funding retirement while in the United Kingdom they are
The Young Pragmatic and Penniless Generation | 24
The government should reduce the overall cost of state pension provision by
reducing the value of Donrsquot know individual pension plans
25 22
4 The government should not do anything State pension provision will
remain perfectly affordable in the future
28
21 The government should increase overall funding
available for the state pension through
raising taxes
The government should take a balanced approach with some reductions in individual payments and
some increases in tax
Chart 18 Young workers think that the government retirement system will need to be reformed Q With the cost of government retirement benefits becoming a greater concern as people live longer which
if any of the following do you think the government should undertake
Base 20-29 year olds
The younger generation believes that the government cannot What do young employees look for in a retirement product continue to provide as it does now ndash just 4 think government The sur vey findings show that young employees have
benefits will remain affordable to society However there is no reser vations about employer and government retirement
consensus on what governments should do to reform retirement benefits So what then do they want from a private savings
plan systems Over a fifth (22) think retirement entitlements product The savings product feature most valued by younger
should be cut just over a fifth (21) think governments should workers is protection against investment risk (Char t 19)
raise taxes and more than a quarter (28) think a mixture of This may be in the form of no loss of initial investment a
the two is the best solution Another quarter admits that they guaranteed income stream or protection against inflation
donrsquot know what should be done This is reasonable ndash the initial investment of those farthest
from retirement is most at risk However less consideration
is given to savings grow th through investment returns This
suggests that there is an oppor tunity to educate young
workers about the trade-off between returns and risk
management and what they stand to gain
25 | The Young Pragmatic and Penniless Generation
Chart 19 Products which protect against investment risk are the most important to young workers ( interested) Q Thinking about the types of financial products you could purchase to help provide you with security in retirement on a scale of 1 to 5
how interested are you in the following options
Base 20-29 year olds
A product providing a guaranteed retirement income stream or lifetime income in retirement 82
A product which protects my retirement income against inflation 81
A product which guarantees that I donrsquot lose my initial investment 81
A product which helps meet the cost of long-term care if I become unable to look after myself 80
A product which protects my capital from poor investment returns 79
A product which generates a retirement income and allows me to take a lump sum from the investment should I need to 79
A product where the annual management charges are kept low 78
A product which enables me to keep some control over how my savings are invested during my retirement 77
A product which manages the asset allocation so that I am never exposed to a level of risk Irsquom not comfortable with 76
A product which continues to provide a retirement income to my spouse in the event that I die first 75
A product which protects my family against having to pay estate taxes when I die 72
A product which locks in investment returns during the good years 70
The lsquodefined ambitionrsquo retirement system in This removes some of the disadvantages of leaving
the Netherlands a sustainable retirement solution retirement liabilities exclusively up to employers
for young workers (defined benefit) or employees (defined contribution)
In the Netherlands as elsewhere young workers are faced In the Netherlands this is likely to involve legislation which
with an increasing retirement age decreasing government lets retirement funds automatically adjust pay-outs and
suppor t for retirement and declining traditional defined retirement age as life expectancy changes xii
benefit employer retirement plans Reforms proposed
by the Dutch may show a way for ward for all mature and This model has garnered interest elsewhere In the
aging economies United Kingdom Pensions Minister Steve Webb expressed
interest on a more limited scale with a government
rsquoDefined ambitionrsquo proposes that risks are not taken on fully guarantee for a minimum rate of return for defined
by either employer or employee but are shared contribution retirement plans
The Young Pragmatic and Penniless Generation | 26
Recommendations Enabling young workers to save The studyrsquos findings reveal that the majority of young workers (66) are either saving consistently or aspire to start saving but face challenges including debt low pay and funding for significant life events and generational changes to the economic landscape and government and employer support If young people are to achieve a prosperous retirement their willingness to save should be met with better opportunities to save Here is what can be done by employers governments and young people themselves to address retirement planning concerns for younger adults
27 | The Young Pragmatic and Penniless Generation
Individuals Employers and governments
Determine how much income you need in retirement Auto-enroll employees into a workplace retirement plan Young people accept the need to save for retirement but donrsquot If an auto-enrollment workplace retirement plan is feasible
know how to act on that need They can become more retirement this can play a major role in getting young workers saving early
savvy simply by talking to friends and family (as do 24 of and regularly Combined with auto-escalation (the automatic
our respondents already) or employers going online to use annual increase in retirement plan contributions) and matching
retirement calculators or reading the personal finance media contributions it can lead to greater retirement readiness
Seek out a financial advisor Provide more flexible savings products through the workplace Young people are faced with life events that make it easy to Not all savings journeys start with a retirement plan particularly
feel overwhelmed by financial priorities in addition to retirement for young people who may think of retirement as lsquotoo far awayrsquo
planning Soliciting advice from a finance professional early in Employers can kick-start the savings habit in younger workers
life (17 of young employees have done so already) helps with by providing flexible easy to access and easy to understand
planning and priorities and making sense of long-term finances savings plans as a more attractive starter option
Start saving now and save consistently Make company retirement plans more portable As with all employees young people will strengthen their Young people move jobs much more often than previous
retirement readiness simply by saving regularly Today only 25 generations of employees so savings like DC retirement plans
of young people always save yet even small regular amounts need to follow employees when they change jobs
will improve retirement readiness over time
Make tax incentives more effective Ask your employer about workplace retirement savings plans All countries encourage long-term savings through tax relief but
and other retirement benefits young people often arenrsquot aware of this or donrsquot understand it
While one third (33) of young people believe that a workplace A more targeted system of tax relief could help provide clearer
retirement savings plan provides a major opportunity to start and simpler signals to younger people about the financial
saving employers often experience difficulties in engaging benefits of long-term saving
younger employees in discussions about retirement planning
The workplace is an important channel for achieving retirement Make better financial education central to the workplace readiness so be sure to max out on any employer contributions retirement offer
Young people who aspire to save may be prevented from
doing so by setting the wrong financial priorities Workplace
retirement education ndash alongside professional advice ndash can help
guide young people toward the right long-term priorities at an
earlier age in life
The Young Pragmatic and Penniless Generation | 28
29 | The Young Pragmatic and Penniless Generation
Glossary
Aegon Retirement Readiness Index (ARRI) c areer average retirement plan The ARRI assesses the relative levels of retirement A type of defined benefit plan that is based on an
preparedness of employees across different countries on a employeersquos average retirement earnings over the duration
scale from 1 to 10 The Index is based on three questions of plan membership Same as average salary plan
covering attitudes and three questions covering behaviors
defined ambition (DA) plan average salary plan A type of retirement plan in which retirement plan risks
A type of defined benefit plan that is based on an are shared between the employer and the employee
employeersquos average retirement earnings over the duration It offers greater certainty to savers around the final value
of plan membership Same as career average plan of their retirement assets than in DC plans and less
cost volatility for employers than with DB plans In the
a nnuity Netherlands Defined Ambition (DA) retirement plans are
A form of contract sold by life insurance companies that being introduced in order to help relieve the pressure on
guarantees a fixed or variable payment to the annuitant employers while still trying to provide employees with a
at some future time usually retirement All capital in the more secure retirement plan The United Kingdom too is
annuity grows tax-deferred looking at DA retirement plans as a solution
auto enrollment defined benefit (DB) plan An employer-sponsored retirement plan in which the An employer-sponsored retirement plan where the amount
employer is able to enroll an employee without that of future benefits an employee will receive from the plan is
employeersquos express authorization The employer determines defined typically by a formula based on salary history and
what percentage of the employeersquos salary or wages is years of service The amount of contributions the employer
contributed to the plan The employee is able to change is required to make will depend on the investment returns
this percentage and can opt out of enrollment in the plan experienced by the plan and the benefits promised
Contrast defined contribution plan
a uto-escalation A feature of a plan which automatically increases the defined contribution (DC) plan percentage of (retirement) funds saved from salary An employer-sponsored retirement plan such as a 401(k)
This feature generally uses a default or standard plan or a 403(b) plan in the United States in which
contribution escalation rate contributions are made to individual participant accounts
Depending on the type of DC plan contributions may be
B aby Boomers made by the employee the employer or both
A term used to refer to people generally born between
the end of World War II in 1945 and the mid 1960s The employeersquos benefits at retirement or termination of
Other generations Silent Generation - the generation born employment are based on the employee and employer
between 1925 and 1945 Generation X - the generation contributions and earnings and losses on those
born between 1965 and 1979 Millennials or Generation contributions See also 401(k) and 403(b) plan
Y - the generation born between 1980 and 2000 and often Contrast defined benefit plan
classified as the children of Baby Boomers
The Young Pragmatic and Penniless Generation | 30
401(k) plan An employer sponsored retirement plan that enables
employees to make tax-deferred contributions from their
salaries to the plan
403(b) plan An employer-sponsored defined contribution plan that
enables employees of universities public schools and
non-profit organizations to make tax-deferred contributions
from their salaries to the plan
final salary plan A type of defined benefit plan in which retirement
benefits are based on final retirement salary in the years
immediately before retirement benefits are received
Millennials A term used to refer to the people born from about 1980
to 2000 brought up using digital technology They are
often classified as the children of Baby Boomers
r etirement (or pension) plan Provides replacement for salary when a person is no
longer working due to retirement In the case of a defined
benefit retirement plan the employer or union contributes
to the plan which pays a predetermined benefit for the
rest of the employeersquos life based on length of service and
salary Payments may be made either directly or through
an annuity Retirement plan payments are taxable income
to recipients in the year received The employer or union
has fiduciary responsibility to invest the retirement plan
funds in stocks bonds real estate and other assets earn
a satisfactory rate of return and make payments to retired
workers Retirement plan funds holding trillions of dollars
are one of the largest investment forces in the stock
bond and real estate markets If the employer defaults in
the United States retirement plan payments are usually
guaranteed by the Pension Benefit Guaranty Corporation
(PBGC)
variable annuities (VA) An insurance contract in which the insurance company
guarantees a minimum payment at the end of the
accumulation period The payments may vary depending
on the financial performance of the managed portfolio
31 | The Young Pragmatic and Penniless Generation
About Aegon Transamerica Center for Retirement Studiesreg and Cicero Consulting
Aegon Transamerica Center Aegon is an international life insurance pensions and asset reg management company with businesses in over 20 markets for Retirement Studies in the Americas Europe and Asia Aegon companies employ The Transamerica Center for Retirement Studiesreg (TCRS) is
around 24000 people and serve millions of customers a division of the Transamerica Institute a nonprofit private
worldwide foundation TCRS is dedicated to educating the public on
wwwaegoncom emerging trends surrounding retirement security in the
United States TCRSrsquo research emphasizes employer-sponsored
In 2010 Aegon became a founding member of the Global retirement plans issues faced by small to mid-sized companies
Coalition on Aging which seeks to raise awareness of aging and their employees and the implications of legislative and
issues among policymakers and the general public A major aim regulatory changes Transamerica Institute is funded by
of the coalition is to transform the way we think and speak contributions from Transamerica Life Insurance Company and
about aging replacing the familiar rhetoric of lsquoproblemsrsquo with its affiliates and may receive funds from unaffiliated third-
a more positive discussion of lsquopossibilitiesrsquo and lsquoopportunitiesrsquo parties For more information about TCRS please refer to
wwwglobalcoalitiononagingcom wwwtransamericacenterorg
Cicero Consulting A leading consultancy firm serving the banking insurance and
asset management sector Cicero specializes in public policy
and communications consulting as well as global thought
leadership and independent market research Cicero was
established in 2001 and now operates from offices in London
Brussels Washington and Singapore As a market leader in
pensions and retirement research Cicero designed
and analyzed the research and contributed to the report
wwwcicero-groupcom
The Young Pragmatic and Penniless Generation | 32
Marta acebo Mark Green Patricia Plas
Paula alvarez douGlas henck scott roane
Frits bart wendel hoFMan thurstan robinson
Grace basile
lynette belFry
andrew berwick
Frans van der horst
tatsuo kai
herMan kaPPelle
Patti rowey
sarah russell
Joost van schaGen
robin boon Gaacutebor kePecs dick schiethart
bert-JaaP brons Marco keiM erik schouten
douG brooks
libby buet
kent callahan
JaiMe kirkPatrick
bas knol
roGer koch
anGela seyMour Jackson
kate sMith
renske stoker
Jeanne de cervens
dana chen
Peter kunkel
alexander kuiPers
eyleen sun
MartiJn tans
arkadiusz chMurzynski
heidi cho
brian lewis
Mike linder
GreG tucker
Mark twiGG
siMon clow siMon luke catherine wanG
robert colliGnon Jason Ma Marc van weede
catherine collinson GrzeGorz Mathea tiM willaert
wendy daniels
Michel denizot
edit drevenka
Paul Middleton
takaoh MiyaGawa
david Moulton
daniel wriGht
alex wynaendts
MacieJ zaPala
Jan driessen
kelly Fu
adrian Grace
Mark Mullin
Marcelle noltenius
stiG nybo
Peacuteter zatykoacute
vicky zeldin
Disclaimer This repor t contains general information only and does
not constitute a solicitation or offer No rights can be
derived from this repor t Aegon its par tners and any of
their affiliates or employees do not guarantee warrant
or represent the accuracy or completeness of the
information contained in the repor t
Acknowledgements
33 | The Young Pragmatic and Penniless Generation
References and notes i For a comparison of different retirement systems see lsquoPensions at a Glance 2011rsquo OECD 2011 ii As the survey was carried out online the survey results in China are based toward people living in urban areas iii ldquoPensions Marketsrdquo TheCityUK March 2013 p9 iv Global Employment Trends for Youth 2013 A generation at risk International Labour Organisation 2013 p2 v Eurostat July 2013 vi OECD Employment and Labour Markets Key Tables from OECD No 2 2012 vii The Federal Reserve Bank of New York 2012 Quarterly Report on Household Debt March 29 2013 viii World Bank ix lsquoWorld-class povertyrsquo The Economist February 27 2013
httpwwweconomistcomblogsanalects201302chinas-poor x lsquoThe Chinese slow down in char tsrsquo The Economist July 15 2013 xi lsquoChina rsquos welfare system difficult inflexible and blatantly unfairrsquo The Guardian April 23 2013
httpwwwtheguardiancomglobal-development2013apr23china-welfare-system-inflexible-unfair xii lsquo The Dutch experience with Defined Ambition pensions and the impact on companiesrsquo Aegon Global Pensions March 12 2013
httpwwwaegonglobalpensionscomenHomePublicationsNews-archiveNewsThe-Dutch-experience-with-Defined
Ambition-pensions-and-what-that-may-mean-for-companies-in-the-Netherlands-and-the-UK
shy
The Young Pragmatic and Penniless Generation | 34
Contact information HE ADQUARTER S
Aegon NV
PO Box 85
2501 CB The Hague
Telephone +31 70 344 32 10
w w waegoncom
MEDIA REL ATIONS
Telephone +31 70 344 89 56
Email gcc-iraegoncom
Countr y Index score
Germany 548
China 541
Canada 524
United States 519
The Netherlands 488
United Kingdom 486
Sweden 483
France 475
Hungar y 473
Poland 463
Spain 440
Japan 430
Total 489
Appendix 1 Aegon Retirement Readiness Index (ARRI) - technical note
Aegon Retirement Readiness Index (ARRI)-technical note 2013 Weightings (2012 in brackets) A sample of 12000 pre and post retirees was drawn from 1 Personal responsibilit y 20 (30)
twelve countries Of these 10800 (90) were pre-retirees 2 Level of awareness 30 (35)
and these were chosen for fur ther analysis of their plans 3 Financial capability Understanding 30 (25)
for retirement The Index that was developed forms an 4 Retirement planning 50 (50)
assessment of how well an individual perceives the adequacy 5 Financial preparedness 60 (60)
of his her own finances and financial awareness specifically 6 Income replacement 35 (35)
for addressing his retirement needs
Note that the weights devised to show the relative
The lsquotargetrsquo for the Index impor tance of each question in calculating the Index add to
The question on current savings activity was designated as the 225 These were then re-scaled so that a final scale of 1 to
target question (dependent variable) for predicting the level of 10 was calculated
preparedness for retirement Responses to this question were
then correlated with each of the six key questions (variables) Final scores by country below to understand which were driving the activity These weightings were multiplied by the actual scores for each
This was done because it was not felt to be correct to give respondent for each of the six Index questions and aggregated
each of the six variables described below an equal weight as to obtain a provisional score This was then adjusted to
they appeared to have quite different relationships to the give countr y scores out of 1 to 10 (A score of 1 to 10 had
target question sufficient differentiation to be used as the scale for analysis)
1 Personal responsibilit y for income in retirement
2 Level of awareness of need to plan for retirement
3 F inancial capability Understanding of financial matters
regarding plans for retirement
4 Retirement planning Level of development of plans
5 Financial preparedness for retirement
6 Income replacement Level of projected income replacement
The weighting To estimate the statistical significance of the decline in overall
scores in this yearrsquos Index is theoretically incalculable
Two things have changed from 2012 to 2013
1 C anada and China have joined the sample
2 The new countries have thus influenced the weights of
emphasis placed on the 6 variables used to calculate
the score hence the weights attached to the complex
calculation have changed
However it is noticeable that for countries which were sampled
in both time periods the mean scores for the six individual
variables have almost invariably declined and on average more
than half of them have shown a significant level of decline
In particular the question lsquoDo you think you will achieve this
incomersquo has for all countries shown a significant level of
decline We thus hypothesize that the comparative results
show a significant decline
The Young Pragmatic and Penniless Generation | 36
Net
herl
ands
Net
herl
ands
Net
herl
ands
Ger
man
yG
erm
any
Ger
man
yBase 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
Better off 7 4 23 Sw
eden
Swed
en11 5 7 8 3 11 14 50 5
Swed
en
About the same 19 18 27 23 8 19 18 13 29 29 24 21 U
ntie
dU
ntie
dU
nite
d Worse off 66 74 41 58 79 69 71 76 51 47 21 55
Kin
gdom
Kin
gdom
Kin
gdom
Donrsquot know 9 3 9 9 9 4 4 8 9 10 6 19
Fran
ceFr
ance
Fran
ce
Chart 2 Education of 20 ndash 29 year olds by country Q Please choose from the following list the highest level of educational or professional qualification you have
Spai
nSp
ain
Spa
in
Pol
and
Pol
and
Pol
and
Hun
gary
Hun
gary
Hun
gar y
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
dU
nite
d 100 100 100 100 100 100 100 100 100
Stat
es100 100 100
Stat
esSt
ates
Less than high school graduate 2 44 6 14 1 3 2 7 1 3 Ca
nada
Cana
daC
anad
aHigh school graduate 11 33 53 23 22 22 4 41 14 21 1 2
Some college or trade school 46 2 9 9 9 19 37 14 28 20 4 33 Ch
ina
Chin
aC
hina
College degree University degree 31 15 27 30 41 43 21 33 50 46 9 57
Postgraduate degree or 8 3 3 23 25 11 36 1 8 9 80 6 qualification Ja
pan
Japa
n Ja
pan
Other 2 4 1 1 1 2 0 5 0 6 2
None 0 1 1 0 1 0 0
NET Less than undergrad degree 61 82 70 47 34 46 43 66 42 45 11 37
NET Undergrad degree or higher 39 18 30 53 66 54 57 34 58 55 89 63
Chart 3 Aegon Retirement Readiness Index scores for young employees by country
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
NET Low Index (0-5) 80 64 79 81 85 78 81 73 65 61 61 87
NET Medium Index (6-7) 15 30 18 15 14 21 17 23 25 31 31 12
NET High Index (8-10) 4 6 3 3 1 2 2 4 10 8 7 1
Appendix 2 Country comparisons Chart 1 The majority of young employees believe that they will be worse off in retirement compared to their parents Q Do you think that future generations of retirees will be better off or worse off than those currently in retirement
37 | The Young Pragmatic and Penniless Generation
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsI always make sure that 27 34 27 26 17 14 19 22 35 33 32 20 I am saving for retirement
I only save for retirement G
erm
any
Ger
man
y21 27 20 13 17 21 16 6 17 24 20 24 occasionally from time to time
I am not saving for retirement now 6 11 8 11 5 15 9 4 10 8 9 5 although I have in the past Sw
eden
Swed
en
I am not saving for retirement 35 23 34 46 53 40 49 54 36 33 38 46 though I do intend to U
nite
dU
ntie
dK
ingd
omK
ingd
om I have never saved for retirement and 11 6 10 5 8 10 6 13 3 2 1 6 donrsquot intend to
Fran
ceFr
ance
Chart 5 Younger people are more likely not to be using any means of retirement savings Sp
ain
Spai
nQ Which financial means if any are you currently using to prepare for your retirement
Pol
and
Pol
and
only asked in Germany only asked in Spain
Hun
gary
Hun
gary
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
dSt
ates
Stat
es100 100 100 100 100 100 100 100 100 100 100 100
Defined benefit plan 16 10 25 29 15 3 76 11 20 13 5 Ca
nada
Cana
daDefined contribution plan 28 10 17 19 19 14 10 23 40 7 3
Private pension 8 18 14 10 5 9 4 13 12 40 66 4 Ch
ina
Chin
a Government pension social security 12 43 14 21 8 7 4 18 27 33 71 35
Stocks 5 12 14 7 4 17 7 2 13 10 23 9
Bonds 1 8 5 6 2 16 4 2 8 13 14 3 Ja
pan
Japa
n
Mutual funds 2 14 23 4 2 10 3 4 7 16 9 6
Investment insurances (annuities) 2 3 2 3 2 9 4 5 2 4 6 1
Savings accounts 23 37 38 25 23 6 29 15 36 37 65 36
Investment property 2 10 6 7 9 2 5 2 5 11 18 1
Employee stock purchase 1 1 1 4 1 29 0 4 1 7 1
My home 10 5 8 7 7 8 4 6 6 14 30 1
Reverse mortgage 1 4 2 4
My business 2 1 3 2 2 4 1 1 2 4 12 1
Inheritance 3 11 7 11 7 9 9 8 7 9 6 2
Annuities 1 15 2 2 1 4 3 2 1 2 8
Long-term care insurance 2 1 3 2 9 5 1 6 4 7 1
Life insurance 6 11 8 8 14 3 18 15 19 18 36 17
Unterstuumltzungskasse aus 2 Eigenmitteln finanziert
Unterstuumltzungskasse vom 2 Arbeitgeber finanziert
Chart 4 Younger employees are much more likely to aspire to save for retirement Which of the following best explains your approach to saving for retirement This can include money you contribute to any long-term
investment including pensions stocks and shares investment-linked insurances property etc
Q
The Young Pragmatic and Penniless Generation | 38
Plan de empleo mixto 2 (combinacioacuten de las dos anteriores)
Other 1 6 4 0 1 2 2 3 2 2 3 3
None nothing 8 14 12 23 25 31 6 27 21 17 3 24
Donrsquot know 29 6 17 13 19 8 4 9 7 7 0 9
hart 6 The younger generation has more negative associations of retirement Which if any of the following words do you most associate with retirement
Net
herl
ands
Net
herl
ands
Ger
man
yG
erm
any
Swed
enSw
eden
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
d100 100 100 100 100 100 100 100 100 100 100 100
Kin
gdom
Kin
gdom
Freedom 35 32 36 39 19 26 11 20 35 40 37 33
Opportunity 7 27 25 18 4 8 9 10 17 16 9 16 Fr
ance
Fran
ceLeisure 58 48 36 41 23 24 43 32 50 50 55 6
Excitement 2 5 3 8 2 6 1 2 17 17 4 3 Sp
ain
Spai
nPoverty 11 26 23 11 26 14 37 44 7 5 6 20
Insecurity 34 24 18 16 20 18 35 56 10 9 18 44 P
olan
dP
olan
dLoneliness 4 10 17 16 12 7 11 8 5 9 20 12
Ill health 2 19 7 14 15 9 49 23 6 6 29 11 H
unga
ryH
unga
ryDependent on others 11 11 5 18 14 8 18 19 14 6 11 4
Tired 3 4 8 10 14 10 17 6 7 7 13 19 U
nite
dU
nite
dFar away 38 19 25 21 61 32 2 13 33
Stat
es33 14 22
Stat
es
Boredom 14 16 6 12 16 12 15 8 12 12 16 17 Ca
nada
Cana
daEnjoyment 21 16 17 23 14 29 5 3 37 37 35 15
None of the above 0 1 1 2 0 2 1 1 2 2 1 2
Donrsquot know 2 2 3 3 2 2 1 2 0 Ch
ina
6 Ch
ina
hart 7 Many young employees think they are not on course to achieve target retirement income Ja
pan
Japa
n Do you think you will achieve this income [your estimated income needed in retirement]
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
I donrsquot know if I am on course to 56 37 57 59 50 39 49 48 48 41 22 68 achieve my retirement income
No I am on course to achieve around one-quarter (25) of my 10 14 9 13 15 14 14 13 10 10 10 7 retirement income
No I am on course to achieve around 12 20 14 11 19 19 18 15 12 11 23 12 half of my retirement income
No I am on course to achieve around three-quarters (75) of my 8 14 7 4 8 15 9 8 6 11 20 5 retirement income
Yes I am on course to achieve my 15 15 13 14 8 13 11 17 25 27 25 8 retirement income
CQ
CQ
39 | The Young Pragmatic and Penniless Generation
Chart 8 Young people in most countries expect to retire before 65 Q At what age do you expect to retire from all paid employment
Net
herl
ands
Ger
man
y
Swed
en
Uni
ted
Kin
gdom
Fran
ce
Spai
n
Pol
and
Hun
gary
Uni
ted
Stat
es
Cana
da
Chin
a
Japa
n
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
40 or under 0 1 1 0 0 1 3 1 5 12
41-50 1 2 3 5 2 2 6 3 9 4 37 9
51-59 4 4 4 6 2 4 11 5 7 10 30 1
60 5 11 8 12 10 13 19 12 12 16 21 27
61-64 2 11 10 2 20 7 4 13 5 3 1 2
65 17 22 44 31 34 32 16 26 26 32 3 25
66-69 42 32 15 9 12 29 20 13 9 9 0 1
70 19 11 10 18 10 5 10 9 13 12 0 6
71+ 5 5 5 9 4 5 5 3 7 5 1 4
Never 2 1 1 2 2 2 6 4 1 0 0
Donrsquot know 2 3 2 5 3 2 8 9 5 5 1 13
Mean 67 65 65 65 64 65 63 64 63 64 53 59
Median 67 65 65 65 65 65 65 65 65 65 55 60
Chart 9 Younger employees feel they donrsquot have money to invest for retirement Q What is the single biggest obstacle to you saving for retirement right now
Net
herl
ands
Ger
man
y
Swed
en
Uni
ted
Kin
gdom
Fran
ce
Spai
n
Pol
and
Hun
gary
Uni
ted
Stat
es
Cana
da
Chin
a
Japa
n
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
The uncertain economic environment 19 8 13 9 13 19 11 14 12 9 29 27
Lack of money to invest 28 41 33 43 47 34 48 55 47 50 6 19
Fear of poor investment returns over the coming years 2 5 10 7 5 6 8 2 6 8 14 6
Complexity of investment products 4 4 4 3 5 3 5 2 12 5
I donrsquot know how to go about investing for the long-term 2 3 10 8 5 5 3 3 6 8 7 9
The fees charged by financial services companies 2 4 4 2 4 3 4 2 3 5 2 5
I canrsquot afford to take financial advice 3 3 6 8 2 4 3 5 3 2 3 2
I donrsquot trust the financial services industry 12 11 8 6 5 10 6 2 2 3 5 4
I donrsquot see the need to save for the long-term 6 1 2 2 3 3 3 1 2 1 4 3
Concerns about unstable currencies currency fluctuations 2 5 1 3 3 3 4 3 4 5 15 2
Other (PLEASE STATE) 3 3 1 1 3 2 4 6 2 2 1
Donrsquot know 17 12 11 7 8 6 3 6 8 6 3 17
The Young Pragmatic and Penniless Generation | 40
Chart 10 More money would incentivize young employees to save for retirement Q Which if any of the following would encourage you to save for retirement
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsMore generous tax breaks on long-term savings and pensions 20 44 30 32 27 23 42 42 33 43 40 32 products
Ger
man
yG
erm
any
Access to financial education so that I am more aware of what 24 6 14 21 16 22 21 12 23 24 43 25 I need to do for myself
Swed
enSw
eden
Access to professional financial advice so that I have personalized
Uni
ted
20 24 23 23 15 21 25 9 22 23 44 13 U
nite
drecommendations on what steps
Kin
gdom
Kin
gdom
I need to take
Simpler investment products that 12 33 19 28 20 Fr
ance
18 27 16 32 28 36 10 Fr
ance
I can understand with less jargon
Better and more frequent information about my retirement 16 28 20 27 27 23
Spai
n20 18 25 31 45 22
Spai
nsavings
Better legal protection in case I am 12 18 13 18 10 24 18 13 13 19 21 6 P
olan
dP
olan
dsold the wrong product
A pay rise 46 54 44 64 55 50 70 72 67 64 53 37
A better retirement plan pension H
unga
ryH
unga
ry27 32 25 33 29 26 42 35 39 44 33 32 match from my employer
Other 4 2 1 1 2 2 3 3 2 U
nite
d3 0
Uni
ted
Stat
esSt
ates
Donrsquot know 17 9 16 10 10 12 3 8 8 5 3 17
Not applicable - I already have 3 3 4 2 2 1 1 1 2 2 3 sufficient savings Ca
nada
Cana
da
Chin
aCh
ina
Chart 11 A majority of younger employees do not have a written plan for retirement Q Which of the following best describes your retirement planning strategy
Japa
n Ja
pan
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
I have a written plan 7 18 10 9 6 8 6 5 13 10 8 4
I have a plan but it is not written 24 47 37 25 23 31 29 31 37 44 55 24
down
I do not have a plan 61 32 51 61 62 55 62 58 45 42 34 61
Donrsquot know 7 3 3 5 8 6 3 6 4 4 3 12
41 | The Young Pragmatic and Penniless Generation
Chart 12 For young employees friends and family are the leading source of retirement savings information Q And which of these sources (of information) is most important to you
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
Bank adviser 6 11 19 5 25 5 7 4 3 17 10 2 N
ethe
rlan
dsN
ethe
rlan
dsProfessional financial adviser 12 22 10 12 10 19 19 22 21 25 19 10
Insurance agent spokesperson 3 10 2 3 1 3 6 2 3 0 3 2 G
erm
any
Ger
man
yInsurance company website 3 1 3 2 4 4 2 2 1 3 1
Personal finance websites online 8 5 7 8 5 4 10 8 12 6 10 8 retirement planning tools Sw
eden
Swed
enPersonal finance media 2 2 2 2 2 6 3 1 2 1 6 2
Government website 7 1 3 6 U
nite
d5 2 3 3 2 3 7 1
Uni
ted
Kin
gdom
Kin
gdom
Bank website 2 3 3 2 1 0 3 2 1 6 3 3
My employer 12 8 4 9 4 7 5 12 8 5 4 1 Fr
ance
Fran
ceAccountant 2 6 4 4 1 3 1 3 5 5 1 3
Lawyer 2 3 1 2 2 8 4 2 1 2 2 0 Sp
ain
Spai
nFriends and family 21 22 30 28 24 26 18 24 26 20 25 24
None of these P
olan
dP
olan
dNot applicable 21 7 16 18 19 13 17 15 14 9 5 41
Hun
gary
Hun
gary
Chart 13 Most young workers feel their employer should provide some kind of pension Q In the future what if anything should employers do to help people plan for retirement
Uni
ted
Uni
ted
Stat
esSt
ates
Cana
daCa
nada
Chin
aCh
ina
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 Ja
pan
Japa
n Employers should be required to 24 43 20 40 21 26 20 28 37 34 20 30 contribute to workersrsquo pensions
Employers should be required to make a pension available but not to 12 13 7 17 20 15 15 4 11 14 22 5 contribute into it
Employers should not be required to provide pensions but should 15 9 12 8 9 8 11 6 11 9 9 11 provide information on how to plan for retirement
Employers should provide a range of flexible benefits and 13 18 18 16 15 27 25 28 21 22 45 12 allow individuals to choose which benefits they actually want
Nothing ndash it should be left to individual employees to take care 2 2 5 1 4 3 3 5 6 5 1 9 of themselves
Nothing ndash it should be left to the government to take care of its 2 5 5 2 5 8 15 14 1 4 0 4 citizens
Donrsquot know 30 10 32 17 27 12 12 15 13 13 3 29
The Young Pragmatic and Penniless Generation | 42
Chart 14 Workplace pensions are relatively low down in young workersrsquo priorities when choosing a job Q How important to you would the following workplace benefits be if you were choosing your next job
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsBasic salary 86 93 88 91 88 92 90 94 90 93 96 94
Holiday entitlement 87 94 89 91 92 94 91 94 93 94 96 91 G
erm
any
Ger
man
yOvertime and bonus pay 86 93 87 88 89 90 89 94 90 91 97 90
Location of workplace 88 91 86 92 89 90 89 92 93 93 92 86 Sw
eden
Swed
enMedical health insurance 73 92 84 65 86 87 88 87 93 94 98 83
Opportunities for career progression 86 91 81 90 90 94 91 94 92 91 96 81 U
nite
dU
nite
dAccess to a workplace retirement 85 85 81 82
Kin
gdom
78 84 80 78 84 86 93 74 K
ingd
omplan with employer contributions
Access to good training provision 85 87 85 88 86 91 85 93 86 90 95 74 Fr
ance
Fran
ceFlexible working hours 79 87 58 86 81 89 81 87 91 91 92 57
Life insurance 72 75 79 69 80 82 Sp
ain
84 80 81 88 93 74 Sp
ain
(death in service benefits)
Phased retirement or other employer programs providing for 74 54 75 71 72 81 76 74 76 81 91 65
Pol
and
Pol
and
a transition into retirement
Ability to work past the normal 68 57 64 65 64 74 72 65 74 76 80 70 retirement age H
unga
ryH
unga
ry
Access to a workplace retirement 62 74 61 68 59 77 61 47 68 74 89 65 plan without employer contributions U
nite
dU
nite
dSt
ates
Stat
esEmployee share plans 50 72 54 65 59 73 61 51 64 73 91 55
Access to creche help with the 67 75 64 56 69 79 75 83 58 69 89 68 cost of childcare Ca
nada
Cana
da
Opportunities for foreign travel 53 54 60 55 50 71 58 66 57 61 79 37
Company car 51 46 45 47 49 63 51 49 36 49 69 Ch
ina
39 Ch
ina
Japa
n Ja
pan
Chart 15 Young workers think the state pension will need to be reformed Q With the cost of government pensions becoming a greater concern as people live longer which if any of the following do you think
the government should undertake
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
The government should reduce the overall cost of state pension 15 33 16 15 16 20 28 22 21 26 30 16 provision by reducing the value of individual pension plans
The government should increase overall funding available for the 12 21 30 22 14 34 19 26 21 18 29 10 state pension through raising taxes
43 | The Young Pragmatic and Penniless Generation
he government should take a alanced approach with some 27 26 12 30 28 23 24 16 34 31 38 41 eductions in individual payments nd some increases in tax
he government should not do nything State pension provision 7 2 12 5 3 4 3 3 5 4 0 5 ill remain perfectly affordable in he future
onrsquot know 38 19 29 29 39 20 26 34 19 21 4 28
Net
herl
ands
art 16 Products which protect against investment risk are the most important to young workers ( interested) Thinking about the types of financial products you could purchase to help provide you with security in retirement on a scale of 1 to 5
how interested are you in the following options G
erm
any
Swed
en
Uni
ted
Kin
gdom
ase 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 Fr
ance
100 100 100 100 100 100 100 100 100 100 100 100
product providing a guaranteed etirement income stream or 75 81 73 76 74 83 78 76 87 85 94 69
Spai
nifetime income in retirement
product which protects my 74 79 73 76 72 82 77 74 84 86 94 65 etirement income against inflation P
olan
d
product which guarantees that I 72 82 73 78 75 81 76 73 86 86 90 67 onrsquot lose my initial investment H
unga
ry product which helps meet the ost of long-term care if I become 74 79 74 77 70 79 76 71 86 85 84 66
Uni
ted
nable to look after myself St
ates
product which protects my capital 71 81 71 76 68 76 77 73 84 83 93 65 rom poor investment returns Ca
nada
product which generates a etirement income and allows 69 78 71 75 68 81 77 72 84 86 94 70 e to take a lump sum from the
Chin
anvestment should I need to
product where the annual 66 78 68 75 72 79 77 70 85 86 87 64 anagement charges are kept low Ja
pan
product which enables me to eep some control over how my 71 73 70 75 72 80 75 69 88 85 91 63 avings are invested during my etirement
product which manages the sset allocation so that I am never 68 70 67 73 66 76 71 67 80 83 95 60 xposed to a level of risk Irsquom not omfortable with
product which continues to rovide a retirement income to my 74 78 71 75 73 81 79 73 86 82 94 60 pouse in the event that I die first
product which protects my family gainst having to pay estate taxes 73 76 71 74 75 81 75 69 82 82 89 56 hen I die
product which locks in investment 72 71 63 73 64 71 59 56 81 84 89 61 eturns during the good years
Tbra
Tawt
D
ChQ
B
Arl
Ar
Ad
Acu
Af
Armi
Am
Aksr
Aaec
Aps
Aaw
Ar
The Young Pragmatic and Penniless Generation | 44
Part 4 Creating the right conditions for young employees to save How may young employeesrsquo obstacles to saving be overcome For retirement readiness this will be a defining question of the early twenty-first centur y ndash and an extremely challenging one given the number of serious issues affecting younger employeesrsquo finances What was learned in the previous chapter about encouraging young employees to save is a start This chapter examines which areas and triggers to saving can be unlocked and whether government employer or individual should take most responsibility
21 | The Young Pragmatic and Penniless Generation
Friends and family
Professional financial adviser
17
24
Bank adviser 9
Personal finance websites online retirement planning tools
My employer
Government website
4
8
7
Insurance agent spokesperson
Accountant
3
3
Personal finance media 3
Lawyer
Bank website
3
2
Insurance company website
Donrsquot know
2
15
Information and advice on retirement saving strong theme revealed by our findings is that younger This finding is remarkably consistent across the countries
mployees want more information on savings products and sur veyed despite significant differences in market makeup
etter access to advice The largest share 24 (compared although some differences exist For instance a quar ter
o 17 for all employees) finds friends and family to be the (25) of young employees in France turn to bank advisers
ost important source of advice followed by professional for financial information nearly triple the number among all
dvisers (17) and bank advisers (9) That young employees young people (9)
urn to friends and family first suggests an unmet need for
rofessional financial advice This is both a challenge and an
pportunity for the financial ser vices sector
hart 15 For young employees friends and family are the leading source of retirement savings information Which of these sources (of information) is most important to you
ase 20-29 year olds
A
e
b
t
m
a
t
p
o
CQ
B
What is the role of the workplace in retirement planning Does this influence what retirement benefits younger
In response to shifting employment patterns todayrsquos younger employees expect from their workplace Certainly a majority
employees are less loyal to their employers than older workers favor workplace retirement plans with 61 believing that these
Fully 39 of 20-29 year olds are planning to look for a new job should be a fundamental part of pay (although this is lower
in the next 12 months compared to 29 of all workers and than for employees overall) and just 4 feel that retirement
31 frequently think about quitting their jobs Strikingly while planning should be left entirely to individuals
53 of all workers plan to stay with their current employer
until retirement just 37 of 20-29 year olds say this However there is evidence of a slight shift in perceptions
Younger workers are less likely to want workplace retirement
Doubtless much of this is because younger workers are more plans over other factors Of those who want employer
mobile and have more opportunities Another trigger to lower retirement plan contributions only 46 wanted this even if
employer loyalty may be the expectation of holding more jobs it reduced benefits and 35 (compared to 43 of all workers)
and even pursuing multiple careers over a working lifetime if it cut jobs
The Young Pragmatic and Penniless Generation | 22
Donrsquot know Employers should be
required to contribute to workersrsquo pensions
5 Nothing ndash it should be left to the government to take 18
care of its citizens 28
4 Nothing ndash it should be left to individual employees to
take care of themselves
13
22
Employers should provide a range of flexible benefits
and allow individuals to choose which benefits they
actually want
10 Employers should
be required to make a pension available but not
to contribute into it
Employers should not be required to provide pensions but should
provide information on how to plan for retirement
Chart 16 Most young workers feel that their employer should provide some kind of pension Q In the future what if anything should employers do to help people plan for retirement
Base 20-29 year olds
Are other workplace benefits more important Younger workers were asked to rate the importance of various workplace benefits The results reveal how highly they value the
elements of their compensation package Chart 17 shows that 87 of young employees believe a workplace retirement plan with
employer contributions would be an important factor when choosing their next job While retirement may be decades away for
twentysomethings 80 believe programs provide for a phased retirement are important
23 | The Young Pragmatic and Penniless Generation
Basic salary 94
93 Holiday entitlement
91 Overtime and bonus pay
91 Location of workplace
88 Medical health insurance
87 Opportunities for career progression
Access to a workplace retirement plan with employer contributions 87
Access to good training provision 86
Flexible working hours 85
Life insurance (death in service benefits) 81
Phased retirement or other employer programs providing for a transition into retirement 80
Ability to work past the normal retirement age 70
Access to a workplace retirement plan without employer contributions
67
Employee stock plans 65
Access to creche help with the cost of childcare 59
Opportunities for foreign travel 50
Company car 43
Chart 17 Workplace retirement plans are a relatively low priority for younger workers when choosing a job How important to you would the following workplace benefits be if you were choosing your next job
ase 20-29 year olds
Q
B
Regarding workplace benefits provided by employers today considered just enough to fulfill basic needs and in China a
young employees are about as likely as all workers to be offered fully formed nationwide retirement system is still some way off
retirement tools such as annual plan statements and online The future shape and affordability of these plans is debated in
tools from their employer though it is concerning that 24 do all of the sur vey countries to var ying degrees
not know if such tools are available or not Those provided are
considered helpful Younger workersrsquo views on reform are important because
changes to government retirement benefits are more likely
The role of government to affect them than any other part of the working population
The generosity of government retirement benefits varies The main concern cited by 57 is of facing less generous
considerably in the countries sur veyed In some countries such government retirement benefits than those enjoyed by their
as France government benefits are the primar y mechanism parentsrsquo generation
for funding retirement while in the United Kingdom they are
The Young Pragmatic and Penniless Generation | 24
The government should reduce the overall cost of state pension provision by
reducing the value of Donrsquot know individual pension plans
25 22
4 The government should not do anything State pension provision will
remain perfectly affordable in the future
28
21 The government should increase overall funding
available for the state pension through
raising taxes
The government should take a balanced approach with some reductions in individual payments and
some increases in tax
Chart 18 Young workers think that the government retirement system will need to be reformed Q With the cost of government retirement benefits becoming a greater concern as people live longer which
if any of the following do you think the government should undertake
Base 20-29 year olds
The younger generation believes that the government cannot What do young employees look for in a retirement product continue to provide as it does now ndash just 4 think government The sur vey findings show that young employees have
benefits will remain affordable to society However there is no reser vations about employer and government retirement
consensus on what governments should do to reform retirement benefits So what then do they want from a private savings
plan systems Over a fifth (22) think retirement entitlements product The savings product feature most valued by younger
should be cut just over a fifth (21) think governments should workers is protection against investment risk (Char t 19)
raise taxes and more than a quarter (28) think a mixture of This may be in the form of no loss of initial investment a
the two is the best solution Another quarter admits that they guaranteed income stream or protection against inflation
donrsquot know what should be done This is reasonable ndash the initial investment of those farthest
from retirement is most at risk However less consideration
is given to savings grow th through investment returns This
suggests that there is an oppor tunity to educate young
workers about the trade-off between returns and risk
management and what they stand to gain
25 | The Young Pragmatic and Penniless Generation
Chart 19 Products which protect against investment risk are the most important to young workers ( interested) Q Thinking about the types of financial products you could purchase to help provide you with security in retirement on a scale of 1 to 5
how interested are you in the following options
Base 20-29 year olds
A product providing a guaranteed retirement income stream or lifetime income in retirement 82
A product which protects my retirement income against inflation 81
A product which guarantees that I donrsquot lose my initial investment 81
A product which helps meet the cost of long-term care if I become unable to look after myself 80
A product which protects my capital from poor investment returns 79
A product which generates a retirement income and allows me to take a lump sum from the investment should I need to 79
A product where the annual management charges are kept low 78
A product which enables me to keep some control over how my savings are invested during my retirement 77
A product which manages the asset allocation so that I am never exposed to a level of risk Irsquom not comfortable with 76
A product which continues to provide a retirement income to my spouse in the event that I die first 75
A product which protects my family against having to pay estate taxes when I die 72
A product which locks in investment returns during the good years 70
The lsquodefined ambitionrsquo retirement system in This removes some of the disadvantages of leaving
the Netherlands a sustainable retirement solution retirement liabilities exclusively up to employers
for young workers (defined benefit) or employees (defined contribution)
In the Netherlands as elsewhere young workers are faced In the Netherlands this is likely to involve legislation which
with an increasing retirement age decreasing government lets retirement funds automatically adjust pay-outs and
suppor t for retirement and declining traditional defined retirement age as life expectancy changes xii
benefit employer retirement plans Reforms proposed
by the Dutch may show a way for ward for all mature and This model has garnered interest elsewhere In the
aging economies United Kingdom Pensions Minister Steve Webb expressed
interest on a more limited scale with a government
rsquoDefined ambitionrsquo proposes that risks are not taken on fully guarantee for a minimum rate of return for defined
by either employer or employee but are shared contribution retirement plans
The Young Pragmatic and Penniless Generation | 26
Recommendations Enabling young workers to save The studyrsquos findings reveal that the majority of young workers (66) are either saving consistently or aspire to start saving but face challenges including debt low pay and funding for significant life events and generational changes to the economic landscape and government and employer support If young people are to achieve a prosperous retirement their willingness to save should be met with better opportunities to save Here is what can be done by employers governments and young people themselves to address retirement planning concerns for younger adults
27 | The Young Pragmatic and Penniless Generation
Individuals Employers and governments
Determine how much income you need in retirement Auto-enroll employees into a workplace retirement plan Young people accept the need to save for retirement but donrsquot If an auto-enrollment workplace retirement plan is feasible
know how to act on that need They can become more retirement this can play a major role in getting young workers saving early
savvy simply by talking to friends and family (as do 24 of and regularly Combined with auto-escalation (the automatic
our respondents already) or employers going online to use annual increase in retirement plan contributions) and matching
retirement calculators or reading the personal finance media contributions it can lead to greater retirement readiness
Seek out a financial advisor Provide more flexible savings products through the workplace Young people are faced with life events that make it easy to Not all savings journeys start with a retirement plan particularly
feel overwhelmed by financial priorities in addition to retirement for young people who may think of retirement as lsquotoo far awayrsquo
planning Soliciting advice from a finance professional early in Employers can kick-start the savings habit in younger workers
life (17 of young employees have done so already) helps with by providing flexible easy to access and easy to understand
planning and priorities and making sense of long-term finances savings plans as a more attractive starter option
Start saving now and save consistently Make company retirement plans more portable As with all employees young people will strengthen their Young people move jobs much more often than previous
retirement readiness simply by saving regularly Today only 25 generations of employees so savings like DC retirement plans
of young people always save yet even small regular amounts need to follow employees when they change jobs
will improve retirement readiness over time
Make tax incentives more effective Ask your employer about workplace retirement savings plans All countries encourage long-term savings through tax relief but
and other retirement benefits young people often arenrsquot aware of this or donrsquot understand it
While one third (33) of young people believe that a workplace A more targeted system of tax relief could help provide clearer
retirement savings plan provides a major opportunity to start and simpler signals to younger people about the financial
saving employers often experience difficulties in engaging benefits of long-term saving
younger employees in discussions about retirement planning
The workplace is an important channel for achieving retirement Make better financial education central to the workplace readiness so be sure to max out on any employer contributions retirement offer
Young people who aspire to save may be prevented from
doing so by setting the wrong financial priorities Workplace
retirement education ndash alongside professional advice ndash can help
guide young people toward the right long-term priorities at an
earlier age in life
The Young Pragmatic and Penniless Generation | 28
29 | The Young Pragmatic and Penniless Generation
Glossary
Aegon Retirement Readiness Index (ARRI) c areer average retirement plan The ARRI assesses the relative levels of retirement A type of defined benefit plan that is based on an
preparedness of employees across different countries on a employeersquos average retirement earnings over the duration
scale from 1 to 10 The Index is based on three questions of plan membership Same as average salary plan
covering attitudes and three questions covering behaviors
defined ambition (DA) plan average salary plan A type of retirement plan in which retirement plan risks
A type of defined benefit plan that is based on an are shared between the employer and the employee
employeersquos average retirement earnings over the duration It offers greater certainty to savers around the final value
of plan membership Same as career average plan of their retirement assets than in DC plans and less
cost volatility for employers than with DB plans In the
a nnuity Netherlands Defined Ambition (DA) retirement plans are
A form of contract sold by life insurance companies that being introduced in order to help relieve the pressure on
guarantees a fixed or variable payment to the annuitant employers while still trying to provide employees with a
at some future time usually retirement All capital in the more secure retirement plan The United Kingdom too is
annuity grows tax-deferred looking at DA retirement plans as a solution
auto enrollment defined benefit (DB) plan An employer-sponsored retirement plan in which the An employer-sponsored retirement plan where the amount
employer is able to enroll an employee without that of future benefits an employee will receive from the plan is
employeersquos express authorization The employer determines defined typically by a formula based on salary history and
what percentage of the employeersquos salary or wages is years of service The amount of contributions the employer
contributed to the plan The employee is able to change is required to make will depend on the investment returns
this percentage and can opt out of enrollment in the plan experienced by the plan and the benefits promised
Contrast defined contribution plan
a uto-escalation A feature of a plan which automatically increases the defined contribution (DC) plan percentage of (retirement) funds saved from salary An employer-sponsored retirement plan such as a 401(k)
This feature generally uses a default or standard plan or a 403(b) plan in the United States in which
contribution escalation rate contributions are made to individual participant accounts
Depending on the type of DC plan contributions may be
B aby Boomers made by the employee the employer or both
A term used to refer to people generally born between
the end of World War II in 1945 and the mid 1960s The employeersquos benefits at retirement or termination of
Other generations Silent Generation - the generation born employment are based on the employee and employer
between 1925 and 1945 Generation X - the generation contributions and earnings and losses on those
born between 1965 and 1979 Millennials or Generation contributions See also 401(k) and 403(b) plan
Y - the generation born between 1980 and 2000 and often Contrast defined benefit plan
classified as the children of Baby Boomers
The Young Pragmatic and Penniless Generation | 30
401(k) plan An employer sponsored retirement plan that enables
employees to make tax-deferred contributions from their
salaries to the plan
403(b) plan An employer-sponsored defined contribution plan that
enables employees of universities public schools and
non-profit organizations to make tax-deferred contributions
from their salaries to the plan
final salary plan A type of defined benefit plan in which retirement
benefits are based on final retirement salary in the years
immediately before retirement benefits are received
Millennials A term used to refer to the people born from about 1980
to 2000 brought up using digital technology They are
often classified as the children of Baby Boomers
r etirement (or pension) plan Provides replacement for salary when a person is no
longer working due to retirement In the case of a defined
benefit retirement plan the employer or union contributes
to the plan which pays a predetermined benefit for the
rest of the employeersquos life based on length of service and
salary Payments may be made either directly or through
an annuity Retirement plan payments are taxable income
to recipients in the year received The employer or union
has fiduciary responsibility to invest the retirement plan
funds in stocks bonds real estate and other assets earn
a satisfactory rate of return and make payments to retired
workers Retirement plan funds holding trillions of dollars
are one of the largest investment forces in the stock
bond and real estate markets If the employer defaults in
the United States retirement plan payments are usually
guaranteed by the Pension Benefit Guaranty Corporation
(PBGC)
variable annuities (VA) An insurance contract in which the insurance company
guarantees a minimum payment at the end of the
accumulation period The payments may vary depending
on the financial performance of the managed portfolio
31 | The Young Pragmatic and Penniless Generation
About Aegon Transamerica Center for Retirement Studiesreg and Cicero Consulting
Aegon Transamerica Center Aegon is an international life insurance pensions and asset reg management company with businesses in over 20 markets for Retirement Studies in the Americas Europe and Asia Aegon companies employ The Transamerica Center for Retirement Studiesreg (TCRS) is
around 24000 people and serve millions of customers a division of the Transamerica Institute a nonprofit private
worldwide foundation TCRS is dedicated to educating the public on
wwwaegoncom emerging trends surrounding retirement security in the
United States TCRSrsquo research emphasizes employer-sponsored
In 2010 Aegon became a founding member of the Global retirement plans issues faced by small to mid-sized companies
Coalition on Aging which seeks to raise awareness of aging and their employees and the implications of legislative and
issues among policymakers and the general public A major aim regulatory changes Transamerica Institute is funded by
of the coalition is to transform the way we think and speak contributions from Transamerica Life Insurance Company and
about aging replacing the familiar rhetoric of lsquoproblemsrsquo with its affiliates and may receive funds from unaffiliated third-
a more positive discussion of lsquopossibilitiesrsquo and lsquoopportunitiesrsquo parties For more information about TCRS please refer to
wwwglobalcoalitiononagingcom wwwtransamericacenterorg
Cicero Consulting A leading consultancy firm serving the banking insurance and
asset management sector Cicero specializes in public policy
and communications consulting as well as global thought
leadership and independent market research Cicero was
established in 2001 and now operates from offices in London
Brussels Washington and Singapore As a market leader in
pensions and retirement research Cicero designed
and analyzed the research and contributed to the report
wwwcicero-groupcom
The Young Pragmatic and Penniless Generation | 32
Marta acebo Mark Green Patricia Plas
Paula alvarez douGlas henck scott roane
Frits bart wendel hoFMan thurstan robinson
Grace basile
lynette belFry
andrew berwick
Frans van der horst
tatsuo kai
herMan kaPPelle
Patti rowey
sarah russell
Joost van schaGen
robin boon Gaacutebor kePecs dick schiethart
bert-JaaP brons Marco keiM erik schouten
douG brooks
libby buet
kent callahan
JaiMe kirkPatrick
bas knol
roGer koch
anGela seyMour Jackson
kate sMith
renske stoker
Jeanne de cervens
dana chen
Peter kunkel
alexander kuiPers
eyleen sun
MartiJn tans
arkadiusz chMurzynski
heidi cho
brian lewis
Mike linder
GreG tucker
Mark twiGG
siMon clow siMon luke catherine wanG
robert colliGnon Jason Ma Marc van weede
catherine collinson GrzeGorz Mathea tiM willaert
wendy daniels
Michel denizot
edit drevenka
Paul Middleton
takaoh MiyaGawa
david Moulton
daniel wriGht
alex wynaendts
MacieJ zaPala
Jan driessen
kelly Fu
adrian Grace
Mark Mullin
Marcelle noltenius
stiG nybo
Peacuteter zatykoacute
vicky zeldin
Disclaimer This repor t contains general information only and does
not constitute a solicitation or offer No rights can be
derived from this repor t Aegon its par tners and any of
their affiliates or employees do not guarantee warrant
or represent the accuracy or completeness of the
information contained in the repor t
Acknowledgements
33 | The Young Pragmatic and Penniless Generation
References and notes i For a comparison of different retirement systems see lsquoPensions at a Glance 2011rsquo OECD 2011 ii As the survey was carried out online the survey results in China are based toward people living in urban areas iii ldquoPensions Marketsrdquo TheCityUK March 2013 p9 iv Global Employment Trends for Youth 2013 A generation at risk International Labour Organisation 2013 p2 v Eurostat July 2013 vi OECD Employment and Labour Markets Key Tables from OECD No 2 2012 vii The Federal Reserve Bank of New York 2012 Quarterly Report on Household Debt March 29 2013 viii World Bank ix lsquoWorld-class povertyrsquo The Economist February 27 2013
httpwwweconomistcomblogsanalects201302chinas-poor x lsquoThe Chinese slow down in char tsrsquo The Economist July 15 2013 xi lsquoChina rsquos welfare system difficult inflexible and blatantly unfairrsquo The Guardian April 23 2013
httpwwwtheguardiancomglobal-development2013apr23china-welfare-system-inflexible-unfair xii lsquo The Dutch experience with Defined Ambition pensions and the impact on companiesrsquo Aegon Global Pensions March 12 2013
httpwwwaegonglobalpensionscomenHomePublicationsNews-archiveNewsThe-Dutch-experience-with-Defined
Ambition-pensions-and-what-that-may-mean-for-companies-in-the-Netherlands-and-the-UK
shy
The Young Pragmatic and Penniless Generation | 34
Contact information HE ADQUARTER S
Aegon NV
PO Box 85
2501 CB The Hague
Telephone +31 70 344 32 10
w w waegoncom
MEDIA REL ATIONS
Telephone +31 70 344 89 56
Email gcc-iraegoncom
Countr y Index score
Germany 548
China 541
Canada 524
United States 519
The Netherlands 488
United Kingdom 486
Sweden 483
France 475
Hungar y 473
Poland 463
Spain 440
Japan 430
Total 489
Appendix 1 Aegon Retirement Readiness Index (ARRI) - technical note
Aegon Retirement Readiness Index (ARRI)-technical note 2013 Weightings (2012 in brackets) A sample of 12000 pre and post retirees was drawn from 1 Personal responsibilit y 20 (30)
twelve countries Of these 10800 (90) were pre-retirees 2 Level of awareness 30 (35)
and these were chosen for fur ther analysis of their plans 3 Financial capability Understanding 30 (25)
for retirement The Index that was developed forms an 4 Retirement planning 50 (50)
assessment of how well an individual perceives the adequacy 5 Financial preparedness 60 (60)
of his her own finances and financial awareness specifically 6 Income replacement 35 (35)
for addressing his retirement needs
Note that the weights devised to show the relative
The lsquotargetrsquo for the Index impor tance of each question in calculating the Index add to
The question on current savings activity was designated as the 225 These were then re-scaled so that a final scale of 1 to
target question (dependent variable) for predicting the level of 10 was calculated
preparedness for retirement Responses to this question were
then correlated with each of the six key questions (variables) Final scores by country below to understand which were driving the activity These weightings were multiplied by the actual scores for each
This was done because it was not felt to be correct to give respondent for each of the six Index questions and aggregated
each of the six variables described below an equal weight as to obtain a provisional score This was then adjusted to
they appeared to have quite different relationships to the give countr y scores out of 1 to 10 (A score of 1 to 10 had
target question sufficient differentiation to be used as the scale for analysis)
1 Personal responsibilit y for income in retirement
2 Level of awareness of need to plan for retirement
3 F inancial capability Understanding of financial matters
regarding plans for retirement
4 Retirement planning Level of development of plans
5 Financial preparedness for retirement
6 Income replacement Level of projected income replacement
The weighting To estimate the statistical significance of the decline in overall
scores in this yearrsquos Index is theoretically incalculable
Two things have changed from 2012 to 2013
1 C anada and China have joined the sample
2 The new countries have thus influenced the weights of
emphasis placed on the 6 variables used to calculate
the score hence the weights attached to the complex
calculation have changed
However it is noticeable that for countries which were sampled
in both time periods the mean scores for the six individual
variables have almost invariably declined and on average more
than half of them have shown a significant level of decline
In particular the question lsquoDo you think you will achieve this
incomersquo has for all countries shown a significant level of
decline We thus hypothesize that the comparative results
show a significant decline
The Young Pragmatic and Penniless Generation | 36
Net
herl
ands
Net
herl
ands
Net
herl
ands
Ger
man
yG
erm
any
Ger
man
yBase 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
Better off 7 4 23 Sw
eden
Swed
en11 5 7 8 3 11 14 50 5
Swed
en
About the same 19 18 27 23 8 19 18 13 29 29 24 21 U
ntie
dU
ntie
dU
nite
d Worse off 66 74 41 58 79 69 71 76 51 47 21 55
Kin
gdom
Kin
gdom
Kin
gdom
Donrsquot know 9 3 9 9 9 4 4 8 9 10 6 19
Fran
ceFr
ance
Fran
ce
Chart 2 Education of 20 ndash 29 year olds by country Q Please choose from the following list the highest level of educational or professional qualification you have
Spai
nSp
ain
Spa
in
Pol
and
Pol
and
Pol
and
Hun
gary
Hun
gary
Hun
gar y
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
dU
nite
d 100 100 100 100 100 100 100 100 100
Stat
es100 100 100
Stat
esSt
ates
Less than high school graduate 2 44 6 14 1 3 2 7 1 3 Ca
nada
Cana
daC
anad
aHigh school graduate 11 33 53 23 22 22 4 41 14 21 1 2
Some college or trade school 46 2 9 9 9 19 37 14 28 20 4 33 Ch
ina
Chin
aC
hina
College degree University degree 31 15 27 30 41 43 21 33 50 46 9 57
Postgraduate degree or 8 3 3 23 25 11 36 1 8 9 80 6 qualification Ja
pan
Japa
n Ja
pan
Other 2 4 1 1 1 2 0 5 0 6 2
None 0 1 1 0 1 0 0
NET Less than undergrad degree 61 82 70 47 34 46 43 66 42 45 11 37
NET Undergrad degree or higher 39 18 30 53 66 54 57 34 58 55 89 63
Chart 3 Aegon Retirement Readiness Index scores for young employees by country
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
NET Low Index (0-5) 80 64 79 81 85 78 81 73 65 61 61 87
NET Medium Index (6-7) 15 30 18 15 14 21 17 23 25 31 31 12
NET High Index (8-10) 4 6 3 3 1 2 2 4 10 8 7 1
Appendix 2 Country comparisons Chart 1 The majority of young employees believe that they will be worse off in retirement compared to their parents Q Do you think that future generations of retirees will be better off or worse off than those currently in retirement
37 | The Young Pragmatic and Penniless Generation
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsI always make sure that 27 34 27 26 17 14 19 22 35 33 32 20 I am saving for retirement
I only save for retirement G
erm
any
Ger
man
y21 27 20 13 17 21 16 6 17 24 20 24 occasionally from time to time
I am not saving for retirement now 6 11 8 11 5 15 9 4 10 8 9 5 although I have in the past Sw
eden
Swed
en
I am not saving for retirement 35 23 34 46 53 40 49 54 36 33 38 46 though I do intend to U
nite
dU
ntie
dK
ingd
omK
ingd
om I have never saved for retirement and 11 6 10 5 8 10 6 13 3 2 1 6 donrsquot intend to
Fran
ceFr
ance
Chart 5 Younger people are more likely not to be using any means of retirement savings Sp
ain
Spai
nQ Which financial means if any are you currently using to prepare for your retirement
Pol
and
Pol
and
only asked in Germany only asked in Spain
Hun
gary
Hun
gary
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
dSt
ates
Stat
es100 100 100 100 100 100 100 100 100 100 100 100
Defined benefit plan 16 10 25 29 15 3 76 11 20 13 5 Ca
nada
Cana
daDefined contribution plan 28 10 17 19 19 14 10 23 40 7 3
Private pension 8 18 14 10 5 9 4 13 12 40 66 4 Ch
ina
Chin
a Government pension social security 12 43 14 21 8 7 4 18 27 33 71 35
Stocks 5 12 14 7 4 17 7 2 13 10 23 9
Bonds 1 8 5 6 2 16 4 2 8 13 14 3 Ja
pan
Japa
n
Mutual funds 2 14 23 4 2 10 3 4 7 16 9 6
Investment insurances (annuities) 2 3 2 3 2 9 4 5 2 4 6 1
Savings accounts 23 37 38 25 23 6 29 15 36 37 65 36
Investment property 2 10 6 7 9 2 5 2 5 11 18 1
Employee stock purchase 1 1 1 4 1 29 0 4 1 7 1
My home 10 5 8 7 7 8 4 6 6 14 30 1
Reverse mortgage 1 4 2 4
My business 2 1 3 2 2 4 1 1 2 4 12 1
Inheritance 3 11 7 11 7 9 9 8 7 9 6 2
Annuities 1 15 2 2 1 4 3 2 1 2 8
Long-term care insurance 2 1 3 2 9 5 1 6 4 7 1
Life insurance 6 11 8 8 14 3 18 15 19 18 36 17
Unterstuumltzungskasse aus 2 Eigenmitteln finanziert
Unterstuumltzungskasse vom 2 Arbeitgeber finanziert
Chart 4 Younger employees are much more likely to aspire to save for retirement Which of the following best explains your approach to saving for retirement This can include money you contribute to any long-term
investment including pensions stocks and shares investment-linked insurances property etc
Q
The Young Pragmatic and Penniless Generation | 38
Plan de empleo mixto 2 (combinacioacuten de las dos anteriores)
Other 1 6 4 0 1 2 2 3 2 2 3 3
None nothing 8 14 12 23 25 31 6 27 21 17 3 24
Donrsquot know 29 6 17 13 19 8 4 9 7 7 0 9
hart 6 The younger generation has more negative associations of retirement Which if any of the following words do you most associate with retirement
Net
herl
ands
Net
herl
ands
Ger
man
yG
erm
any
Swed
enSw
eden
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
d100 100 100 100 100 100 100 100 100 100 100 100
Kin
gdom
Kin
gdom
Freedom 35 32 36 39 19 26 11 20 35 40 37 33
Opportunity 7 27 25 18 4 8 9 10 17 16 9 16 Fr
ance
Fran
ceLeisure 58 48 36 41 23 24 43 32 50 50 55 6
Excitement 2 5 3 8 2 6 1 2 17 17 4 3 Sp
ain
Spai
nPoverty 11 26 23 11 26 14 37 44 7 5 6 20
Insecurity 34 24 18 16 20 18 35 56 10 9 18 44 P
olan
dP
olan
dLoneliness 4 10 17 16 12 7 11 8 5 9 20 12
Ill health 2 19 7 14 15 9 49 23 6 6 29 11 H
unga
ryH
unga
ryDependent on others 11 11 5 18 14 8 18 19 14 6 11 4
Tired 3 4 8 10 14 10 17 6 7 7 13 19 U
nite
dU
nite
dFar away 38 19 25 21 61 32 2 13 33
Stat
es33 14 22
Stat
es
Boredom 14 16 6 12 16 12 15 8 12 12 16 17 Ca
nada
Cana
daEnjoyment 21 16 17 23 14 29 5 3 37 37 35 15
None of the above 0 1 1 2 0 2 1 1 2 2 1 2
Donrsquot know 2 2 3 3 2 2 1 2 0 Ch
ina
6 Ch
ina
hart 7 Many young employees think they are not on course to achieve target retirement income Ja
pan
Japa
n Do you think you will achieve this income [your estimated income needed in retirement]
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
I donrsquot know if I am on course to 56 37 57 59 50 39 49 48 48 41 22 68 achieve my retirement income
No I am on course to achieve around one-quarter (25) of my 10 14 9 13 15 14 14 13 10 10 10 7 retirement income
No I am on course to achieve around 12 20 14 11 19 19 18 15 12 11 23 12 half of my retirement income
No I am on course to achieve around three-quarters (75) of my 8 14 7 4 8 15 9 8 6 11 20 5 retirement income
Yes I am on course to achieve my 15 15 13 14 8 13 11 17 25 27 25 8 retirement income
CQ
CQ
39 | The Young Pragmatic and Penniless Generation
Chart 8 Young people in most countries expect to retire before 65 Q At what age do you expect to retire from all paid employment
Net
herl
ands
Ger
man
y
Swed
en
Uni
ted
Kin
gdom
Fran
ce
Spai
n
Pol
and
Hun
gary
Uni
ted
Stat
es
Cana
da
Chin
a
Japa
n
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
40 or under 0 1 1 0 0 1 3 1 5 12
41-50 1 2 3 5 2 2 6 3 9 4 37 9
51-59 4 4 4 6 2 4 11 5 7 10 30 1
60 5 11 8 12 10 13 19 12 12 16 21 27
61-64 2 11 10 2 20 7 4 13 5 3 1 2
65 17 22 44 31 34 32 16 26 26 32 3 25
66-69 42 32 15 9 12 29 20 13 9 9 0 1
70 19 11 10 18 10 5 10 9 13 12 0 6
71+ 5 5 5 9 4 5 5 3 7 5 1 4
Never 2 1 1 2 2 2 6 4 1 0 0
Donrsquot know 2 3 2 5 3 2 8 9 5 5 1 13
Mean 67 65 65 65 64 65 63 64 63 64 53 59
Median 67 65 65 65 65 65 65 65 65 65 55 60
Chart 9 Younger employees feel they donrsquot have money to invest for retirement Q What is the single biggest obstacle to you saving for retirement right now
Net
herl
ands
Ger
man
y
Swed
en
Uni
ted
Kin
gdom
Fran
ce
Spai
n
Pol
and
Hun
gary
Uni
ted
Stat
es
Cana
da
Chin
a
Japa
n
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
The uncertain economic environment 19 8 13 9 13 19 11 14 12 9 29 27
Lack of money to invest 28 41 33 43 47 34 48 55 47 50 6 19
Fear of poor investment returns over the coming years 2 5 10 7 5 6 8 2 6 8 14 6
Complexity of investment products 4 4 4 3 5 3 5 2 12 5
I donrsquot know how to go about investing for the long-term 2 3 10 8 5 5 3 3 6 8 7 9
The fees charged by financial services companies 2 4 4 2 4 3 4 2 3 5 2 5
I canrsquot afford to take financial advice 3 3 6 8 2 4 3 5 3 2 3 2
I donrsquot trust the financial services industry 12 11 8 6 5 10 6 2 2 3 5 4
I donrsquot see the need to save for the long-term 6 1 2 2 3 3 3 1 2 1 4 3
Concerns about unstable currencies currency fluctuations 2 5 1 3 3 3 4 3 4 5 15 2
Other (PLEASE STATE) 3 3 1 1 3 2 4 6 2 2 1
Donrsquot know 17 12 11 7 8 6 3 6 8 6 3 17
The Young Pragmatic and Penniless Generation | 40
Chart 10 More money would incentivize young employees to save for retirement Q Which if any of the following would encourage you to save for retirement
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsMore generous tax breaks on long-term savings and pensions 20 44 30 32 27 23 42 42 33 43 40 32 products
Ger
man
yG
erm
any
Access to financial education so that I am more aware of what 24 6 14 21 16 22 21 12 23 24 43 25 I need to do for myself
Swed
enSw
eden
Access to professional financial advice so that I have personalized
Uni
ted
20 24 23 23 15 21 25 9 22 23 44 13 U
nite
drecommendations on what steps
Kin
gdom
Kin
gdom
I need to take
Simpler investment products that 12 33 19 28 20 Fr
ance
18 27 16 32 28 36 10 Fr
ance
I can understand with less jargon
Better and more frequent information about my retirement 16 28 20 27 27 23
Spai
n20 18 25 31 45 22
Spai
nsavings
Better legal protection in case I am 12 18 13 18 10 24 18 13 13 19 21 6 P
olan
dP
olan
dsold the wrong product
A pay rise 46 54 44 64 55 50 70 72 67 64 53 37
A better retirement plan pension H
unga
ryH
unga
ry27 32 25 33 29 26 42 35 39 44 33 32 match from my employer
Other 4 2 1 1 2 2 3 3 2 U
nite
d3 0
Uni
ted
Stat
esSt
ates
Donrsquot know 17 9 16 10 10 12 3 8 8 5 3 17
Not applicable - I already have 3 3 4 2 2 1 1 1 2 2 3 sufficient savings Ca
nada
Cana
da
Chin
aCh
ina
Chart 11 A majority of younger employees do not have a written plan for retirement Q Which of the following best describes your retirement planning strategy
Japa
n Ja
pan
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
I have a written plan 7 18 10 9 6 8 6 5 13 10 8 4
I have a plan but it is not written 24 47 37 25 23 31 29 31 37 44 55 24
down
I do not have a plan 61 32 51 61 62 55 62 58 45 42 34 61
Donrsquot know 7 3 3 5 8 6 3 6 4 4 3 12
41 | The Young Pragmatic and Penniless Generation
Chart 12 For young employees friends and family are the leading source of retirement savings information Q And which of these sources (of information) is most important to you
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
Bank adviser 6 11 19 5 25 5 7 4 3 17 10 2 N
ethe
rlan
dsN
ethe
rlan
dsProfessional financial adviser 12 22 10 12 10 19 19 22 21 25 19 10
Insurance agent spokesperson 3 10 2 3 1 3 6 2 3 0 3 2 G
erm
any
Ger
man
yInsurance company website 3 1 3 2 4 4 2 2 1 3 1
Personal finance websites online 8 5 7 8 5 4 10 8 12 6 10 8 retirement planning tools Sw
eden
Swed
enPersonal finance media 2 2 2 2 2 6 3 1 2 1 6 2
Government website 7 1 3 6 U
nite
d5 2 3 3 2 3 7 1
Uni
ted
Kin
gdom
Kin
gdom
Bank website 2 3 3 2 1 0 3 2 1 6 3 3
My employer 12 8 4 9 4 7 5 12 8 5 4 1 Fr
ance
Fran
ceAccountant 2 6 4 4 1 3 1 3 5 5 1 3
Lawyer 2 3 1 2 2 8 4 2 1 2 2 0 Sp
ain
Spai
nFriends and family 21 22 30 28 24 26 18 24 26 20 25 24
None of these P
olan
dP
olan
dNot applicable 21 7 16 18 19 13 17 15 14 9 5 41
Hun
gary
Hun
gary
Chart 13 Most young workers feel their employer should provide some kind of pension Q In the future what if anything should employers do to help people plan for retirement
Uni
ted
Uni
ted
Stat
esSt
ates
Cana
daCa
nada
Chin
aCh
ina
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 Ja
pan
Japa
n Employers should be required to 24 43 20 40 21 26 20 28 37 34 20 30 contribute to workersrsquo pensions
Employers should be required to make a pension available but not to 12 13 7 17 20 15 15 4 11 14 22 5 contribute into it
Employers should not be required to provide pensions but should 15 9 12 8 9 8 11 6 11 9 9 11 provide information on how to plan for retirement
Employers should provide a range of flexible benefits and 13 18 18 16 15 27 25 28 21 22 45 12 allow individuals to choose which benefits they actually want
Nothing ndash it should be left to individual employees to take care 2 2 5 1 4 3 3 5 6 5 1 9 of themselves
Nothing ndash it should be left to the government to take care of its 2 5 5 2 5 8 15 14 1 4 0 4 citizens
Donrsquot know 30 10 32 17 27 12 12 15 13 13 3 29
The Young Pragmatic and Penniless Generation | 42
Chart 14 Workplace pensions are relatively low down in young workersrsquo priorities when choosing a job Q How important to you would the following workplace benefits be if you were choosing your next job
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsBasic salary 86 93 88 91 88 92 90 94 90 93 96 94
Holiday entitlement 87 94 89 91 92 94 91 94 93 94 96 91 G
erm
any
Ger
man
yOvertime and bonus pay 86 93 87 88 89 90 89 94 90 91 97 90
Location of workplace 88 91 86 92 89 90 89 92 93 93 92 86 Sw
eden
Swed
enMedical health insurance 73 92 84 65 86 87 88 87 93 94 98 83
Opportunities for career progression 86 91 81 90 90 94 91 94 92 91 96 81 U
nite
dU
nite
dAccess to a workplace retirement 85 85 81 82
Kin
gdom
78 84 80 78 84 86 93 74 K
ingd
omplan with employer contributions
Access to good training provision 85 87 85 88 86 91 85 93 86 90 95 74 Fr
ance
Fran
ceFlexible working hours 79 87 58 86 81 89 81 87 91 91 92 57
Life insurance 72 75 79 69 80 82 Sp
ain
84 80 81 88 93 74 Sp
ain
(death in service benefits)
Phased retirement or other employer programs providing for 74 54 75 71 72 81 76 74 76 81 91 65
Pol
and
Pol
and
a transition into retirement
Ability to work past the normal 68 57 64 65 64 74 72 65 74 76 80 70 retirement age H
unga
ryH
unga
ry
Access to a workplace retirement 62 74 61 68 59 77 61 47 68 74 89 65 plan without employer contributions U
nite
dU
nite
dSt
ates
Stat
esEmployee share plans 50 72 54 65 59 73 61 51 64 73 91 55
Access to creche help with the 67 75 64 56 69 79 75 83 58 69 89 68 cost of childcare Ca
nada
Cana
da
Opportunities for foreign travel 53 54 60 55 50 71 58 66 57 61 79 37
Company car 51 46 45 47 49 63 51 49 36 49 69 Ch
ina
39 Ch
ina
Japa
n Ja
pan
Chart 15 Young workers think the state pension will need to be reformed Q With the cost of government pensions becoming a greater concern as people live longer which if any of the following do you think
the government should undertake
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
The government should reduce the overall cost of state pension 15 33 16 15 16 20 28 22 21 26 30 16 provision by reducing the value of individual pension plans
The government should increase overall funding available for the 12 21 30 22 14 34 19 26 21 18 29 10 state pension through raising taxes
43 | The Young Pragmatic and Penniless Generation
he government should take a alanced approach with some 27 26 12 30 28 23 24 16 34 31 38 41 eductions in individual payments nd some increases in tax
he government should not do nything State pension provision 7 2 12 5 3 4 3 3 5 4 0 5 ill remain perfectly affordable in he future
onrsquot know 38 19 29 29 39 20 26 34 19 21 4 28
Net
herl
ands
art 16 Products which protect against investment risk are the most important to young workers ( interested) Thinking about the types of financial products you could purchase to help provide you with security in retirement on a scale of 1 to 5
how interested are you in the following options G
erm
any
Swed
en
Uni
ted
Kin
gdom
ase 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 Fr
ance
100 100 100 100 100 100 100 100 100 100 100 100
product providing a guaranteed etirement income stream or 75 81 73 76 74 83 78 76 87 85 94 69
Spai
nifetime income in retirement
product which protects my 74 79 73 76 72 82 77 74 84 86 94 65 etirement income against inflation P
olan
d
product which guarantees that I 72 82 73 78 75 81 76 73 86 86 90 67 onrsquot lose my initial investment H
unga
ry product which helps meet the ost of long-term care if I become 74 79 74 77 70 79 76 71 86 85 84 66
Uni
ted
nable to look after myself St
ates
product which protects my capital 71 81 71 76 68 76 77 73 84 83 93 65 rom poor investment returns Ca
nada
product which generates a etirement income and allows 69 78 71 75 68 81 77 72 84 86 94 70 e to take a lump sum from the
Chin
anvestment should I need to
product where the annual 66 78 68 75 72 79 77 70 85 86 87 64 anagement charges are kept low Ja
pan
product which enables me to eep some control over how my 71 73 70 75 72 80 75 69 88 85 91 63 avings are invested during my etirement
product which manages the sset allocation so that I am never 68 70 67 73 66 76 71 67 80 83 95 60 xposed to a level of risk Irsquom not omfortable with
product which continues to rovide a retirement income to my 74 78 71 75 73 81 79 73 86 82 94 60 pouse in the event that I die first
product which protects my family gainst having to pay estate taxes 73 76 71 74 75 81 75 69 82 82 89 56 hen I die
product which locks in investment 72 71 63 73 64 71 59 56 81 84 89 61 eturns during the good years
Tbra
Tawt
D
ChQ
B
Arl
Ar
Ad
Acu
Af
Armi
Am
Aksr
Aaec
Aps
Aaw
Ar
The Young Pragmatic and Penniless Generation | 44
Friends and family
Professional financial adviser
17
24
Bank adviser 9
Personal finance websites online retirement planning tools
My employer
Government website
4
8
7
Insurance agent spokesperson
Accountant
3
3
Personal finance media 3
Lawyer
Bank website
3
2
Insurance company website
Donrsquot know
2
15
Information and advice on retirement saving strong theme revealed by our findings is that younger This finding is remarkably consistent across the countries
mployees want more information on savings products and sur veyed despite significant differences in market makeup
etter access to advice The largest share 24 (compared although some differences exist For instance a quar ter
o 17 for all employees) finds friends and family to be the (25) of young employees in France turn to bank advisers
ost important source of advice followed by professional for financial information nearly triple the number among all
dvisers (17) and bank advisers (9) That young employees young people (9)
urn to friends and family first suggests an unmet need for
rofessional financial advice This is both a challenge and an
pportunity for the financial ser vices sector
hart 15 For young employees friends and family are the leading source of retirement savings information Which of these sources (of information) is most important to you
ase 20-29 year olds
A
e
b
t
m
a
t
p
o
CQ
B
What is the role of the workplace in retirement planning Does this influence what retirement benefits younger
In response to shifting employment patterns todayrsquos younger employees expect from their workplace Certainly a majority
employees are less loyal to their employers than older workers favor workplace retirement plans with 61 believing that these
Fully 39 of 20-29 year olds are planning to look for a new job should be a fundamental part of pay (although this is lower
in the next 12 months compared to 29 of all workers and than for employees overall) and just 4 feel that retirement
31 frequently think about quitting their jobs Strikingly while planning should be left entirely to individuals
53 of all workers plan to stay with their current employer
until retirement just 37 of 20-29 year olds say this However there is evidence of a slight shift in perceptions
Younger workers are less likely to want workplace retirement
Doubtless much of this is because younger workers are more plans over other factors Of those who want employer
mobile and have more opportunities Another trigger to lower retirement plan contributions only 46 wanted this even if
employer loyalty may be the expectation of holding more jobs it reduced benefits and 35 (compared to 43 of all workers)
and even pursuing multiple careers over a working lifetime if it cut jobs
The Young Pragmatic and Penniless Generation | 22
Donrsquot know Employers should be
required to contribute to workersrsquo pensions
5 Nothing ndash it should be left to the government to take 18
care of its citizens 28
4 Nothing ndash it should be left to individual employees to
take care of themselves
13
22
Employers should provide a range of flexible benefits
and allow individuals to choose which benefits they
actually want
10 Employers should
be required to make a pension available but not
to contribute into it
Employers should not be required to provide pensions but should
provide information on how to plan for retirement
Chart 16 Most young workers feel that their employer should provide some kind of pension Q In the future what if anything should employers do to help people plan for retirement
Base 20-29 year olds
Are other workplace benefits more important Younger workers were asked to rate the importance of various workplace benefits The results reveal how highly they value the
elements of their compensation package Chart 17 shows that 87 of young employees believe a workplace retirement plan with
employer contributions would be an important factor when choosing their next job While retirement may be decades away for
twentysomethings 80 believe programs provide for a phased retirement are important
23 | The Young Pragmatic and Penniless Generation
Basic salary 94
93 Holiday entitlement
91 Overtime and bonus pay
91 Location of workplace
88 Medical health insurance
87 Opportunities for career progression
Access to a workplace retirement plan with employer contributions 87
Access to good training provision 86
Flexible working hours 85
Life insurance (death in service benefits) 81
Phased retirement or other employer programs providing for a transition into retirement 80
Ability to work past the normal retirement age 70
Access to a workplace retirement plan without employer contributions
67
Employee stock plans 65
Access to creche help with the cost of childcare 59
Opportunities for foreign travel 50
Company car 43
Chart 17 Workplace retirement plans are a relatively low priority for younger workers when choosing a job How important to you would the following workplace benefits be if you were choosing your next job
ase 20-29 year olds
Q
B
Regarding workplace benefits provided by employers today considered just enough to fulfill basic needs and in China a
young employees are about as likely as all workers to be offered fully formed nationwide retirement system is still some way off
retirement tools such as annual plan statements and online The future shape and affordability of these plans is debated in
tools from their employer though it is concerning that 24 do all of the sur vey countries to var ying degrees
not know if such tools are available or not Those provided are
considered helpful Younger workersrsquo views on reform are important because
changes to government retirement benefits are more likely
The role of government to affect them than any other part of the working population
The generosity of government retirement benefits varies The main concern cited by 57 is of facing less generous
considerably in the countries sur veyed In some countries such government retirement benefits than those enjoyed by their
as France government benefits are the primar y mechanism parentsrsquo generation
for funding retirement while in the United Kingdom they are
The Young Pragmatic and Penniless Generation | 24
The government should reduce the overall cost of state pension provision by
reducing the value of Donrsquot know individual pension plans
25 22
4 The government should not do anything State pension provision will
remain perfectly affordable in the future
28
21 The government should increase overall funding
available for the state pension through
raising taxes
The government should take a balanced approach with some reductions in individual payments and
some increases in tax
Chart 18 Young workers think that the government retirement system will need to be reformed Q With the cost of government retirement benefits becoming a greater concern as people live longer which
if any of the following do you think the government should undertake
Base 20-29 year olds
The younger generation believes that the government cannot What do young employees look for in a retirement product continue to provide as it does now ndash just 4 think government The sur vey findings show that young employees have
benefits will remain affordable to society However there is no reser vations about employer and government retirement
consensus on what governments should do to reform retirement benefits So what then do they want from a private savings
plan systems Over a fifth (22) think retirement entitlements product The savings product feature most valued by younger
should be cut just over a fifth (21) think governments should workers is protection against investment risk (Char t 19)
raise taxes and more than a quarter (28) think a mixture of This may be in the form of no loss of initial investment a
the two is the best solution Another quarter admits that they guaranteed income stream or protection against inflation
donrsquot know what should be done This is reasonable ndash the initial investment of those farthest
from retirement is most at risk However less consideration
is given to savings grow th through investment returns This
suggests that there is an oppor tunity to educate young
workers about the trade-off between returns and risk
management and what they stand to gain
25 | The Young Pragmatic and Penniless Generation
Chart 19 Products which protect against investment risk are the most important to young workers ( interested) Q Thinking about the types of financial products you could purchase to help provide you with security in retirement on a scale of 1 to 5
how interested are you in the following options
Base 20-29 year olds
A product providing a guaranteed retirement income stream or lifetime income in retirement 82
A product which protects my retirement income against inflation 81
A product which guarantees that I donrsquot lose my initial investment 81
A product which helps meet the cost of long-term care if I become unable to look after myself 80
A product which protects my capital from poor investment returns 79
A product which generates a retirement income and allows me to take a lump sum from the investment should I need to 79
A product where the annual management charges are kept low 78
A product which enables me to keep some control over how my savings are invested during my retirement 77
A product which manages the asset allocation so that I am never exposed to a level of risk Irsquom not comfortable with 76
A product which continues to provide a retirement income to my spouse in the event that I die first 75
A product which protects my family against having to pay estate taxes when I die 72
A product which locks in investment returns during the good years 70
The lsquodefined ambitionrsquo retirement system in This removes some of the disadvantages of leaving
the Netherlands a sustainable retirement solution retirement liabilities exclusively up to employers
for young workers (defined benefit) or employees (defined contribution)
In the Netherlands as elsewhere young workers are faced In the Netherlands this is likely to involve legislation which
with an increasing retirement age decreasing government lets retirement funds automatically adjust pay-outs and
suppor t for retirement and declining traditional defined retirement age as life expectancy changes xii
benefit employer retirement plans Reforms proposed
by the Dutch may show a way for ward for all mature and This model has garnered interest elsewhere In the
aging economies United Kingdom Pensions Minister Steve Webb expressed
interest on a more limited scale with a government
rsquoDefined ambitionrsquo proposes that risks are not taken on fully guarantee for a minimum rate of return for defined
by either employer or employee but are shared contribution retirement plans
The Young Pragmatic and Penniless Generation | 26
Recommendations Enabling young workers to save The studyrsquos findings reveal that the majority of young workers (66) are either saving consistently or aspire to start saving but face challenges including debt low pay and funding for significant life events and generational changes to the economic landscape and government and employer support If young people are to achieve a prosperous retirement their willingness to save should be met with better opportunities to save Here is what can be done by employers governments and young people themselves to address retirement planning concerns for younger adults
27 | The Young Pragmatic and Penniless Generation
Individuals Employers and governments
Determine how much income you need in retirement Auto-enroll employees into a workplace retirement plan Young people accept the need to save for retirement but donrsquot If an auto-enrollment workplace retirement plan is feasible
know how to act on that need They can become more retirement this can play a major role in getting young workers saving early
savvy simply by talking to friends and family (as do 24 of and regularly Combined with auto-escalation (the automatic
our respondents already) or employers going online to use annual increase in retirement plan contributions) and matching
retirement calculators or reading the personal finance media contributions it can lead to greater retirement readiness
Seek out a financial advisor Provide more flexible savings products through the workplace Young people are faced with life events that make it easy to Not all savings journeys start with a retirement plan particularly
feel overwhelmed by financial priorities in addition to retirement for young people who may think of retirement as lsquotoo far awayrsquo
planning Soliciting advice from a finance professional early in Employers can kick-start the savings habit in younger workers
life (17 of young employees have done so already) helps with by providing flexible easy to access and easy to understand
planning and priorities and making sense of long-term finances savings plans as a more attractive starter option
Start saving now and save consistently Make company retirement plans more portable As with all employees young people will strengthen their Young people move jobs much more often than previous
retirement readiness simply by saving regularly Today only 25 generations of employees so savings like DC retirement plans
of young people always save yet even small regular amounts need to follow employees when they change jobs
will improve retirement readiness over time
Make tax incentives more effective Ask your employer about workplace retirement savings plans All countries encourage long-term savings through tax relief but
and other retirement benefits young people often arenrsquot aware of this or donrsquot understand it
While one third (33) of young people believe that a workplace A more targeted system of tax relief could help provide clearer
retirement savings plan provides a major opportunity to start and simpler signals to younger people about the financial
saving employers often experience difficulties in engaging benefits of long-term saving
younger employees in discussions about retirement planning
The workplace is an important channel for achieving retirement Make better financial education central to the workplace readiness so be sure to max out on any employer contributions retirement offer
Young people who aspire to save may be prevented from
doing so by setting the wrong financial priorities Workplace
retirement education ndash alongside professional advice ndash can help
guide young people toward the right long-term priorities at an
earlier age in life
The Young Pragmatic and Penniless Generation | 28
29 | The Young Pragmatic and Penniless Generation
Glossary
Aegon Retirement Readiness Index (ARRI) c areer average retirement plan The ARRI assesses the relative levels of retirement A type of defined benefit plan that is based on an
preparedness of employees across different countries on a employeersquos average retirement earnings over the duration
scale from 1 to 10 The Index is based on three questions of plan membership Same as average salary plan
covering attitudes and three questions covering behaviors
defined ambition (DA) plan average salary plan A type of retirement plan in which retirement plan risks
A type of defined benefit plan that is based on an are shared between the employer and the employee
employeersquos average retirement earnings over the duration It offers greater certainty to savers around the final value
of plan membership Same as career average plan of their retirement assets than in DC plans and less
cost volatility for employers than with DB plans In the
a nnuity Netherlands Defined Ambition (DA) retirement plans are
A form of contract sold by life insurance companies that being introduced in order to help relieve the pressure on
guarantees a fixed or variable payment to the annuitant employers while still trying to provide employees with a
at some future time usually retirement All capital in the more secure retirement plan The United Kingdom too is
annuity grows tax-deferred looking at DA retirement plans as a solution
auto enrollment defined benefit (DB) plan An employer-sponsored retirement plan in which the An employer-sponsored retirement plan where the amount
employer is able to enroll an employee without that of future benefits an employee will receive from the plan is
employeersquos express authorization The employer determines defined typically by a formula based on salary history and
what percentage of the employeersquos salary or wages is years of service The amount of contributions the employer
contributed to the plan The employee is able to change is required to make will depend on the investment returns
this percentage and can opt out of enrollment in the plan experienced by the plan and the benefits promised
Contrast defined contribution plan
a uto-escalation A feature of a plan which automatically increases the defined contribution (DC) plan percentage of (retirement) funds saved from salary An employer-sponsored retirement plan such as a 401(k)
This feature generally uses a default or standard plan or a 403(b) plan in the United States in which
contribution escalation rate contributions are made to individual participant accounts
Depending on the type of DC plan contributions may be
B aby Boomers made by the employee the employer or both
A term used to refer to people generally born between
the end of World War II in 1945 and the mid 1960s The employeersquos benefits at retirement or termination of
Other generations Silent Generation - the generation born employment are based on the employee and employer
between 1925 and 1945 Generation X - the generation contributions and earnings and losses on those
born between 1965 and 1979 Millennials or Generation contributions See also 401(k) and 403(b) plan
Y - the generation born between 1980 and 2000 and often Contrast defined benefit plan
classified as the children of Baby Boomers
The Young Pragmatic and Penniless Generation | 30
401(k) plan An employer sponsored retirement plan that enables
employees to make tax-deferred contributions from their
salaries to the plan
403(b) plan An employer-sponsored defined contribution plan that
enables employees of universities public schools and
non-profit organizations to make tax-deferred contributions
from their salaries to the plan
final salary plan A type of defined benefit plan in which retirement
benefits are based on final retirement salary in the years
immediately before retirement benefits are received
Millennials A term used to refer to the people born from about 1980
to 2000 brought up using digital technology They are
often classified as the children of Baby Boomers
r etirement (or pension) plan Provides replacement for salary when a person is no
longer working due to retirement In the case of a defined
benefit retirement plan the employer or union contributes
to the plan which pays a predetermined benefit for the
rest of the employeersquos life based on length of service and
salary Payments may be made either directly or through
an annuity Retirement plan payments are taxable income
to recipients in the year received The employer or union
has fiduciary responsibility to invest the retirement plan
funds in stocks bonds real estate and other assets earn
a satisfactory rate of return and make payments to retired
workers Retirement plan funds holding trillions of dollars
are one of the largest investment forces in the stock
bond and real estate markets If the employer defaults in
the United States retirement plan payments are usually
guaranteed by the Pension Benefit Guaranty Corporation
(PBGC)
variable annuities (VA) An insurance contract in which the insurance company
guarantees a minimum payment at the end of the
accumulation period The payments may vary depending
on the financial performance of the managed portfolio
31 | The Young Pragmatic and Penniless Generation
About Aegon Transamerica Center for Retirement Studiesreg and Cicero Consulting
Aegon Transamerica Center Aegon is an international life insurance pensions and asset reg management company with businesses in over 20 markets for Retirement Studies in the Americas Europe and Asia Aegon companies employ The Transamerica Center for Retirement Studiesreg (TCRS) is
around 24000 people and serve millions of customers a division of the Transamerica Institute a nonprofit private
worldwide foundation TCRS is dedicated to educating the public on
wwwaegoncom emerging trends surrounding retirement security in the
United States TCRSrsquo research emphasizes employer-sponsored
In 2010 Aegon became a founding member of the Global retirement plans issues faced by small to mid-sized companies
Coalition on Aging which seeks to raise awareness of aging and their employees and the implications of legislative and
issues among policymakers and the general public A major aim regulatory changes Transamerica Institute is funded by
of the coalition is to transform the way we think and speak contributions from Transamerica Life Insurance Company and
about aging replacing the familiar rhetoric of lsquoproblemsrsquo with its affiliates and may receive funds from unaffiliated third-
a more positive discussion of lsquopossibilitiesrsquo and lsquoopportunitiesrsquo parties For more information about TCRS please refer to
wwwglobalcoalitiononagingcom wwwtransamericacenterorg
Cicero Consulting A leading consultancy firm serving the banking insurance and
asset management sector Cicero specializes in public policy
and communications consulting as well as global thought
leadership and independent market research Cicero was
established in 2001 and now operates from offices in London
Brussels Washington and Singapore As a market leader in
pensions and retirement research Cicero designed
and analyzed the research and contributed to the report
wwwcicero-groupcom
The Young Pragmatic and Penniless Generation | 32
Marta acebo Mark Green Patricia Plas
Paula alvarez douGlas henck scott roane
Frits bart wendel hoFMan thurstan robinson
Grace basile
lynette belFry
andrew berwick
Frans van der horst
tatsuo kai
herMan kaPPelle
Patti rowey
sarah russell
Joost van schaGen
robin boon Gaacutebor kePecs dick schiethart
bert-JaaP brons Marco keiM erik schouten
douG brooks
libby buet
kent callahan
JaiMe kirkPatrick
bas knol
roGer koch
anGela seyMour Jackson
kate sMith
renske stoker
Jeanne de cervens
dana chen
Peter kunkel
alexander kuiPers
eyleen sun
MartiJn tans
arkadiusz chMurzynski
heidi cho
brian lewis
Mike linder
GreG tucker
Mark twiGG
siMon clow siMon luke catherine wanG
robert colliGnon Jason Ma Marc van weede
catherine collinson GrzeGorz Mathea tiM willaert
wendy daniels
Michel denizot
edit drevenka
Paul Middleton
takaoh MiyaGawa
david Moulton
daniel wriGht
alex wynaendts
MacieJ zaPala
Jan driessen
kelly Fu
adrian Grace
Mark Mullin
Marcelle noltenius
stiG nybo
Peacuteter zatykoacute
vicky zeldin
Disclaimer This repor t contains general information only and does
not constitute a solicitation or offer No rights can be
derived from this repor t Aegon its par tners and any of
their affiliates or employees do not guarantee warrant
or represent the accuracy or completeness of the
information contained in the repor t
Acknowledgements
33 | The Young Pragmatic and Penniless Generation
References and notes i For a comparison of different retirement systems see lsquoPensions at a Glance 2011rsquo OECD 2011 ii As the survey was carried out online the survey results in China are based toward people living in urban areas iii ldquoPensions Marketsrdquo TheCityUK March 2013 p9 iv Global Employment Trends for Youth 2013 A generation at risk International Labour Organisation 2013 p2 v Eurostat July 2013 vi OECD Employment and Labour Markets Key Tables from OECD No 2 2012 vii The Federal Reserve Bank of New York 2012 Quarterly Report on Household Debt March 29 2013 viii World Bank ix lsquoWorld-class povertyrsquo The Economist February 27 2013
httpwwweconomistcomblogsanalects201302chinas-poor x lsquoThe Chinese slow down in char tsrsquo The Economist July 15 2013 xi lsquoChina rsquos welfare system difficult inflexible and blatantly unfairrsquo The Guardian April 23 2013
httpwwwtheguardiancomglobal-development2013apr23china-welfare-system-inflexible-unfair xii lsquo The Dutch experience with Defined Ambition pensions and the impact on companiesrsquo Aegon Global Pensions March 12 2013
httpwwwaegonglobalpensionscomenHomePublicationsNews-archiveNewsThe-Dutch-experience-with-Defined
Ambition-pensions-and-what-that-may-mean-for-companies-in-the-Netherlands-and-the-UK
shy
The Young Pragmatic and Penniless Generation | 34
Contact information HE ADQUARTER S
Aegon NV
PO Box 85
2501 CB The Hague
Telephone +31 70 344 32 10
w w waegoncom
MEDIA REL ATIONS
Telephone +31 70 344 89 56
Email gcc-iraegoncom
Countr y Index score
Germany 548
China 541
Canada 524
United States 519
The Netherlands 488
United Kingdom 486
Sweden 483
France 475
Hungar y 473
Poland 463
Spain 440
Japan 430
Total 489
Appendix 1 Aegon Retirement Readiness Index (ARRI) - technical note
Aegon Retirement Readiness Index (ARRI)-technical note 2013 Weightings (2012 in brackets) A sample of 12000 pre and post retirees was drawn from 1 Personal responsibilit y 20 (30)
twelve countries Of these 10800 (90) were pre-retirees 2 Level of awareness 30 (35)
and these were chosen for fur ther analysis of their plans 3 Financial capability Understanding 30 (25)
for retirement The Index that was developed forms an 4 Retirement planning 50 (50)
assessment of how well an individual perceives the adequacy 5 Financial preparedness 60 (60)
of his her own finances and financial awareness specifically 6 Income replacement 35 (35)
for addressing his retirement needs
Note that the weights devised to show the relative
The lsquotargetrsquo for the Index impor tance of each question in calculating the Index add to
The question on current savings activity was designated as the 225 These were then re-scaled so that a final scale of 1 to
target question (dependent variable) for predicting the level of 10 was calculated
preparedness for retirement Responses to this question were
then correlated with each of the six key questions (variables) Final scores by country below to understand which were driving the activity These weightings were multiplied by the actual scores for each
This was done because it was not felt to be correct to give respondent for each of the six Index questions and aggregated
each of the six variables described below an equal weight as to obtain a provisional score This was then adjusted to
they appeared to have quite different relationships to the give countr y scores out of 1 to 10 (A score of 1 to 10 had
target question sufficient differentiation to be used as the scale for analysis)
1 Personal responsibilit y for income in retirement
2 Level of awareness of need to plan for retirement
3 F inancial capability Understanding of financial matters
regarding plans for retirement
4 Retirement planning Level of development of plans
5 Financial preparedness for retirement
6 Income replacement Level of projected income replacement
The weighting To estimate the statistical significance of the decline in overall
scores in this yearrsquos Index is theoretically incalculable
Two things have changed from 2012 to 2013
1 C anada and China have joined the sample
2 The new countries have thus influenced the weights of
emphasis placed on the 6 variables used to calculate
the score hence the weights attached to the complex
calculation have changed
However it is noticeable that for countries which were sampled
in both time periods the mean scores for the six individual
variables have almost invariably declined and on average more
than half of them have shown a significant level of decline
In particular the question lsquoDo you think you will achieve this
incomersquo has for all countries shown a significant level of
decline We thus hypothesize that the comparative results
show a significant decline
The Young Pragmatic and Penniless Generation | 36
Net
herl
ands
Net
herl
ands
Net
herl
ands
Ger
man
yG
erm
any
Ger
man
yBase 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
Better off 7 4 23 Sw
eden
Swed
en11 5 7 8 3 11 14 50 5
Swed
en
About the same 19 18 27 23 8 19 18 13 29 29 24 21 U
ntie
dU
ntie
dU
nite
d Worse off 66 74 41 58 79 69 71 76 51 47 21 55
Kin
gdom
Kin
gdom
Kin
gdom
Donrsquot know 9 3 9 9 9 4 4 8 9 10 6 19
Fran
ceFr
ance
Fran
ce
Chart 2 Education of 20 ndash 29 year olds by country Q Please choose from the following list the highest level of educational or professional qualification you have
Spai
nSp
ain
Spa
in
Pol
and
Pol
and
Pol
and
Hun
gary
Hun
gary
Hun
gar y
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
dU
nite
d 100 100 100 100 100 100 100 100 100
Stat
es100 100 100
Stat
esSt
ates
Less than high school graduate 2 44 6 14 1 3 2 7 1 3 Ca
nada
Cana
daC
anad
aHigh school graduate 11 33 53 23 22 22 4 41 14 21 1 2
Some college or trade school 46 2 9 9 9 19 37 14 28 20 4 33 Ch
ina
Chin
aC
hina
College degree University degree 31 15 27 30 41 43 21 33 50 46 9 57
Postgraduate degree or 8 3 3 23 25 11 36 1 8 9 80 6 qualification Ja
pan
Japa
n Ja
pan
Other 2 4 1 1 1 2 0 5 0 6 2
None 0 1 1 0 1 0 0
NET Less than undergrad degree 61 82 70 47 34 46 43 66 42 45 11 37
NET Undergrad degree or higher 39 18 30 53 66 54 57 34 58 55 89 63
Chart 3 Aegon Retirement Readiness Index scores for young employees by country
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
NET Low Index (0-5) 80 64 79 81 85 78 81 73 65 61 61 87
NET Medium Index (6-7) 15 30 18 15 14 21 17 23 25 31 31 12
NET High Index (8-10) 4 6 3 3 1 2 2 4 10 8 7 1
Appendix 2 Country comparisons Chart 1 The majority of young employees believe that they will be worse off in retirement compared to their parents Q Do you think that future generations of retirees will be better off or worse off than those currently in retirement
37 | The Young Pragmatic and Penniless Generation
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsI always make sure that 27 34 27 26 17 14 19 22 35 33 32 20 I am saving for retirement
I only save for retirement G
erm
any
Ger
man
y21 27 20 13 17 21 16 6 17 24 20 24 occasionally from time to time
I am not saving for retirement now 6 11 8 11 5 15 9 4 10 8 9 5 although I have in the past Sw
eden
Swed
en
I am not saving for retirement 35 23 34 46 53 40 49 54 36 33 38 46 though I do intend to U
nite
dU
ntie
dK
ingd
omK
ingd
om I have never saved for retirement and 11 6 10 5 8 10 6 13 3 2 1 6 donrsquot intend to
Fran
ceFr
ance
Chart 5 Younger people are more likely not to be using any means of retirement savings Sp
ain
Spai
nQ Which financial means if any are you currently using to prepare for your retirement
Pol
and
Pol
and
only asked in Germany only asked in Spain
Hun
gary
Hun
gary
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
dSt
ates
Stat
es100 100 100 100 100 100 100 100 100 100 100 100
Defined benefit plan 16 10 25 29 15 3 76 11 20 13 5 Ca
nada
Cana
daDefined contribution plan 28 10 17 19 19 14 10 23 40 7 3
Private pension 8 18 14 10 5 9 4 13 12 40 66 4 Ch
ina
Chin
a Government pension social security 12 43 14 21 8 7 4 18 27 33 71 35
Stocks 5 12 14 7 4 17 7 2 13 10 23 9
Bonds 1 8 5 6 2 16 4 2 8 13 14 3 Ja
pan
Japa
n
Mutual funds 2 14 23 4 2 10 3 4 7 16 9 6
Investment insurances (annuities) 2 3 2 3 2 9 4 5 2 4 6 1
Savings accounts 23 37 38 25 23 6 29 15 36 37 65 36
Investment property 2 10 6 7 9 2 5 2 5 11 18 1
Employee stock purchase 1 1 1 4 1 29 0 4 1 7 1
My home 10 5 8 7 7 8 4 6 6 14 30 1
Reverse mortgage 1 4 2 4
My business 2 1 3 2 2 4 1 1 2 4 12 1
Inheritance 3 11 7 11 7 9 9 8 7 9 6 2
Annuities 1 15 2 2 1 4 3 2 1 2 8
Long-term care insurance 2 1 3 2 9 5 1 6 4 7 1
Life insurance 6 11 8 8 14 3 18 15 19 18 36 17
Unterstuumltzungskasse aus 2 Eigenmitteln finanziert
Unterstuumltzungskasse vom 2 Arbeitgeber finanziert
Chart 4 Younger employees are much more likely to aspire to save for retirement Which of the following best explains your approach to saving for retirement This can include money you contribute to any long-term
investment including pensions stocks and shares investment-linked insurances property etc
Q
The Young Pragmatic and Penniless Generation | 38
Plan de empleo mixto 2 (combinacioacuten de las dos anteriores)
Other 1 6 4 0 1 2 2 3 2 2 3 3
None nothing 8 14 12 23 25 31 6 27 21 17 3 24
Donrsquot know 29 6 17 13 19 8 4 9 7 7 0 9
hart 6 The younger generation has more negative associations of retirement Which if any of the following words do you most associate with retirement
Net
herl
ands
Net
herl
ands
Ger
man
yG
erm
any
Swed
enSw
eden
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
d100 100 100 100 100 100 100 100 100 100 100 100
Kin
gdom
Kin
gdom
Freedom 35 32 36 39 19 26 11 20 35 40 37 33
Opportunity 7 27 25 18 4 8 9 10 17 16 9 16 Fr
ance
Fran
ceLeisure 58 48 36 41 23 24 43 32 50 50 55 6
Excitement 2 5 3 8 2 6 1 2 17 17 4 3 Sp
ain
Spai
nPoverty 11 26 23 11 26 14 37 44 7 5 6 20
Insecurity 34 24 18 16 20 18 35 56 10 9 18 44 P
olan
dP
olan
dLoneliness 4 10 17 16 12 7 11 8 5 9 20 12
Ill health 2 19 7 14 15 9 49 23 6 6 29 11 H
unga
ryH
unga
ryDependent on others 11 11 5 18 14 8 18 19 14 6 11 4
Tired 3 4 8 10 14 10 17 6 7 7 13 19 U
nite
dU
nite
dFar away 38 19 25 21 61 32 2 13 33
Stat
es33 14 22
Stat
es
Boredom 14 16 6 12 16 12 15 8 12 12 16 17 Ca
nada
Cana
daEnjoyment 21 16 17 23 14 29 5 3 37 37 35 15
None of the above 0 1 1 2 0 2 1 1 2 2 1 2
Donrsquot know 2 2 3 3 2 2 1 2 0 Ch
ina
6 Ch
ina
hart 7 Many young employees think they are not on course to achieve target retirement income Ja
pan
Japa
n Do you think you will achieve this income [your estimated income needed in retirement]
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
I donrsquot know if I am on course to 56 37 57 59 50 39 49 48 48 41 22 68 achieve my retirement income
No I am on course to achieve around one-quarter (25) of my 10 14 9 13 15 14 14 13 10 10 10 7 retirement income
No I am on course to achieve around 12 20 14 11 19 19 18 15 12 11 23 12 half of my retirement income
No I am on course to achieve around three-quarters (75) of my 8 14 7 4 8 15 9 8 6 11 20 5 retirement income
Yes I am on course to achieve my 15 15 13 14 8 13 11 17 25 27 25 8 retirement income
CQ
CQ
39 | The Young Pragmatic and Penniless Generation
Chart 8 Young people in most countries expect to retire before 65 Q At what age do you expect to retire from all paid employment
Net
herl
ands
Ger
man
y
Swed
en
Uni
ted
Kin
gdom
Fran
ce
Spai
n
Pol
and
Hun
gary
Uni
ted
Stat
es
Cana
da
Chin
a
Japa
n
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
40 or under 0 1 1 0 0 1 3 1 5 12
41-50 1 2 3 5 2 2 6 3 9 4 37 9
51-59 4 4 4 6 2 4 11 5 7 10 30 1
60 5 11 8 12 10 13 19 12 12 16 21 27
61-64 2 11 10 2 20 7 4 13 5 3 1 2
65 17 22 44 31 34 32 16 26 26 32 3 25
66-69 42 32 15 9 12 29 20 13 9 9 0 1
70 19 11 10 18 10 5 10 9 13 12 0 6
71+ 5 5 5 9 4 5 5 3 7 5 1 4
Never 2 1 1 2 2 2 6 4 1 0 0
Donrsquot know 2 3 2 5 3 2 8 9 5 5 1 13
Mean 67 65 65 65 64 65 63 64 63 64 53 59
Median 67 65 65 65 65 65 65 65 65 65 55 60
Chart 9 Younger employees feel they donrsquot have money to invest for retirement Q What is the single biggest obstacle to you saving for retirement right now
Net
herl
ands
Ger
man
y
Swed
en
Uni
ted
Kin
gdom
Fran
ce
Spai
n
Pol
and
Hun
gary
Uni
ted
Stat
es
Cana
da
Chin
a
Japa
n
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
The uncertain economic environment 19 8 13 9 13 19 11 14 12 9 29 27
Lack of money to invest 28 41 33 43 47 34 48 55 47 50 6 19
Fear of poor investment returns over the coming years 2 5 10 7 5 6 8 2 6 8 14 6
Complexity of investment products 4 4 4 3 5 3 5 2 12 5
I donrsquot know how to go about investing for the long-term 2 3 10 8 5 5 3 3 6 8 7 9
The fees charged by financial services companies 2 4 4 2 4 3 4 2 3 5 2 5
I canrsquot afford to take financial advice 3 3 6 8 2 4 3 5 3 2 3 2
I donrsquot trust the financial services industry 12 11 8 6 5 10 6 2 2 3 5 4
I donrsquot see the need to save for the long-term 6 1 2 2 3 3 3 1 2 1 4 3
Concerns about unstable currencies currency fluctuations 2 5 1 3 3 3 4 3 4 5 15 2
Other (PLEASE STATE) 3 3 1 1 3 2 4 6 2 2 1
Donrsquot know 17 12 11 7 8 6 3 6 8 6 3 17
The Young Pragmatic and Penniless Generation | 40
Chart 10 More money would incentivize young employees to save for retirement Q Which if any of the following would encourage you to save for retirement
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsMore generous tax breaks on long-term savings and pensions 20 44 30 32 27 23 42 42 33 43 40 32 products
Ger
man
yG
erm
any
Access to financial education so that I am more aware of what 24 6 14 21 16 22 21 12 23 24 43 25 I need to do for myself
Swed
enSw
eden
Access to professional financial advice so that I have personalized
Uni
ted
20 24 23 23 15 21 25 9 22 23 44 13 U
nite
drecommendations on what steps
Kin
gdom
Kin
gdom
I need to take
Simpler investment products that 12 33 19 28 20 Fr
ance
18 27 16 32 28 36 10 Fr
ance
I can understand with less jargon
Better and more frequent information about my retirement 16 28 20 27 27 23
Spai
n20 18 25 31 45 22
Spai
nsavings
Better legal protection in case I am 12 18 13 18 10 24 18 13 13 19 21 6 P
olan
dP
olan
dsold the wrong product
A pay rise 46 54 44 64 55 50 70 72 67 64 53 37
A better retirement plan pension H
unga
ryH
unga
ry27 32 25 33 29 26 42 35 39 44 33 32 match from my employer
Other 4 2 1 1 2 2 3 3 2 U
nite
d3 0
Uni
ted
Stat
esSt
ates
Donrsquot know 17 9 16 10 10 12 3 8 8 5 3 17
Not applicable - I already have 3 3 4 2 2 1 1 1 2 2 3 sufficient savings Ca
nada
Cana
da
Chin
aCh
ina
Chart 11 A majority of younger employees do not have a written plan for retirement Q Which of the following best describes your retirement planning strategy
Japa
n Ja
pan
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
I have a written plan 7 18 10 9 6 8 6 5 13 10 8 4
I have a plan but it is not written 24 47 37 25 23 31 29 31 37 44 55 24
down
I do not have a plan 61 32 51 61 62 55 62 58 45 42 34 61
Donrsquot know 7 3 3 5 8 6 3 6 4 4 3 12
41 | The Young Pragmatic and Penniless Generation
Chart 12 For young employees friends and family are the leading source of retirement savings information Q And which of these sources (of information) is most important to you
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
Bank adviser 6 11 19 5 25 5 7 4 3 17 10 2 N
ethe
rlan
dsN
ethe
rlan
dsProfessional financial adviser 12 22 10 12 10 19 19 22 21 25 19 10
Insurance agent spokesperson 3 10 2 3 1 3 6 2 3 0 3 2 G
erm
any
Ger
man
yInsurance company website 3 1 3 2 4 4 2 2 1 3 1
Personal finance websites online 8 5 7 8 5 4 10 8 12 6 10 8 retirement planning tools Sw
eden
Swed
enPersonal finance media 2 2 2 2 2 6 3 1 2 1 6 2
Government website 7 1 3 6 U
nite
d5 2 3 3 2 3 7 1
Uni
ted
Kin
gdom
Kin
gdom
Bank website 2 3 3 2 1 0 3 2 1 6 3 3
My employer 12 8 4 9 4 7 5 12 8 5 4 1 Fr
ance
Fran
ceAccountant 2 6 4 4 1 3 1 3 5 5 1 3
Lawyer 2 3 1 2 2 8 4 2 1 2 2 0 Sp
ain
Spai
nFriends and family 21 22 30 28 24 26 18 24 26 20 25 24
None of these P
olan
dP
olan
dNot applicable 21 7 16 18 19 13 17 15 14 9 5 41
Hun
gary
Hun
gary
Chart 13 Most young workers feel their employer should provide some kind of pension Q In the future what if anything should employers do to help people plan for retirement
Uni
ted
Uni
ted
Stat
esSt
ates
Cana
daCa
nada
Chin
aCh
ina
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 Ja
pan
Japa
n Employers should be required to 24 43 20 40 21 26 20 28 37 34 20 30 contribute to workersrsquo pensions
Employers should be required to make a pension available but not to 12 13 7 17 20 15 15 4 11 14 22 5 contribute into it
Employers should not be required to provide pensions but should 15 9 12 8 9 8 11 6 11 9 9 11 provide information on how to plan for retirement
Employers should provide a range of flexible benefits and 13 18 18 16 15 27 25 28 21 22 45 12 allow individuals to choose which benefits they actually want
Nothing ndash it should be left to individual employees to take care 2 2 5 1 4 3 3 5 6 5 1 9 of themselves
Nothing ndash it should be left to the government to take care of its 2 5 5 2 5 8 15 14 1 4 0 4 citizens
Donrsquot know 30 10 32 17 27 12 12 15 13 13 3 29
The Young Pragmatic and Penniless Generation | 42
Chart 14 Workplace pensions are relatively low down in young workersrsquo priorities when choosing a job Q How important to you would the following workplace benefits be if you were choosing your next job
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsBasic salary 86 93 88 91 88 92 90 94 90 93 96 94
Holiday entitlement 87 94 89 91 92 94 91 94 93 94 96 91 G
erm
any
Ger
man
yOvertime and bonus pay 86 93 87 88 89 90 89 94 90 91 97 90
Location of workplace 88 91 86 92 89 90 89 92 93 93 92 86 Sw
eden
Swed
enMedical health insurance 73 92 84 65 86 87 88 87 93 94 98 83
Opportunities for career progression 86 91 81 90 90 94 91 94 92 91 96 81 U
nite
dU
nite
dAccess to a workplace retirement 85 85 81 82
Kin
gdom
78 84 80 78 84 86 93 74 K
ingd
omplan with employer contributions
Access to good training provision 85 87 85 88 86 91 85 93 86 90 95 74 Fr
ance
Fran
ceFlexible working hours 79 87 58 86 81 89 81 87 91 91 92 57
Life insurance 72 75 79 69 80 82 Sp
ain
84 80 81 88 93 74 Sp
ain
(death in service benefits)
Phased retirement or other employer programs providing for 74 54 75 71 72 81 76 74 76 81 91 65
Pol
and
Pol
and
a transition into retirement
Ability to work past the normal 68 57 64 65 64 74 72 65 74 76 80 70 retirement age H
unga
ryH
unga
ry
Access to a workplace retirement 62 74 61 68 59 77 61 47 68 74 89 65 plan without employer contributions U
nite
dU
nite
dSt
ates
Stat
esEmployee share plans 50 72 54 65 59 73 61 51 64 73 91 55
Access to creche help with the 67 75 64 56 69 79 75 83 58 69 89 68 cost of childcare Ca
nada
Cana
da
Opportunities for foreign travel 53 54 60 55 50 71 58 66 57 61 79 37
Company car 51 46 45 47 49 63 51 49 36 49 69 Ch
ina
39 Ch
ina
Japa
n Ja
pan
Chart 15 Young workers think the state pension will need to be reformed Q With the cost of government pensions becoming a greater concern as people live longer which if any of the following do you think
the government should undertake
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
The government should reduce the overall cost of state pension 15 33 16 15 16 20 28 22 21 26 30 16 provision by reducing the value of individual pension plans
The government should increase overall funding available for the 12 21 30 22 14 34 19 26 21 18 29 10 state pension through raising taxes
43 | The Young Pragmatic and Penniless Generation
he government should take a alanced approach with some 27 26 12 30 28 23 24 16 34 31 38 41 eductions in individual payments nd some increases in tax
he government should not do nything State pension provision 7 2 12 5 3 4 3 3 5 4 0 5 ill remain perfectly affordable in he future
onrsquot know 38 19 29 29 39 20 26 34 19 21 4 28
Net
herl
ands
art 16 Products which protect against investment risk are the most important to young workers ( interested) Thinking about the types of financial products you could purchase to help provide you with security in retirement on a scale of 1 to 5
how interested are you in the following options G
erm
any
Swed
en
Uni
ted
Kin
gdom
ase 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 Fr
ance
100 100 100 100 100 100 100 100 100 100 100 100
product providing a guaranteed etirement income stream or 75 81 73 76 74 83 78 76 87 85 94 69
Spai
nifetime income in retirement
product which protects my 74 79 73 76 72 82 77 74 84 86 94 65 etirement income against inflation P
olan
d
product which guarantees that I 72 82 73 78 75 81 76 73 86 86 90 67 onrsquot lose my initial investment H
unga
ry product which helps meet the ost of long-term care if I become 74 79 74 77 70 79 76 71 86 85 84 66
Uni
ted
nable to look after myself St
ates
product which protects my capital 71 81 71 76 68 76 77 73 84 83 93 65 rom poor investment returns Ca
nada
product which generates a etirement income and allows 69 78 71 75 68 81 77 72 84 86 94 70 e to take a lump sum from the
Chin
anvestment should I need to
product where the annual 66 78 68 75 72 79 77 70 85 86 87 64 anagement charges are kept low Ja
pan
product which enables me to eep some control over how my 71 73 70 75 72 80 75 69 88 85 91 63 avings are invested during my etirement
product which manages the sset allocation so that I am never 68 70 67 73 66 76 71 67 80 83 95 60 xposed to a level of risk Irsquom not omfortable with
product which continues to rovide a retirement income to my 74 78 71 75 73 81 79 73 86 82 94 60 pouse in the event that I die first
product which protects my family gainst having to pay estate taxes 73 76 71 74 75 81 75 69 82 82 89 56 hen I die
product which locks in investment 72 71 63 73 64 71 59 56 81 84 89 61 eturns during the good years
Tbra
Tawt
D
ChQ
B
Arl
Ar
Ad
Acu
Af
Armi
Am
Aksr
Aaec
Aps
Aaw
Ar
The Young Pragmatic and Penniless Generation | 44
Donrsquot know Employers should be
required to contribute to workersrsquo pensions
5 Nothing ndash it should be left to the government to take 18
care of its citizens 28
4 Nothing ndash it should be left to individual employees to
take care of themselves
13
22
Employers should provide a range of flexible benefits
and allow individuals to choose which benefits they
actually want
10 Employers should
be required to make a pension available but not
to contribute into it
Employers should not be required to provide pensions but should
provide information on how to plan for retirement
Chart 16 Most young workers feel that their employer should provide some kind of pension Q In the future what if anything should employers do to help people plan for retirement
Base 20-29 year olds
Are other workplace benefits more important Younger workers were asked to rate the importance of various workplace benefits The results reveal how highly they value the
elements of their compensation package Chart 17 shows that 87 of young employees believe a workplace retirement plan with
employer contributions would be an important factor when choosing their next job While retirement may be decades away for
twentysomethings 80 believe programs provide for a phased retirement are important
23 | The Young Pragmatic and Penniless Generation
Basic salary 94
93 Holiday entitlement
91 Overtime and bonus pay
91 Location of workplace
88 Medical health insurance
87 Opportunities for career progression
Access to a workplace retirement plan with employer contributions 87
Access to good training provision 86
Flexible working hours 85
Life insurance (death in service benefits) 81
Phased retirement or other employer programs providing for a transition into retirement 80
Ability to work past the normal retirement age 70
Access to a workplace retirement plan without employer contributions
67
Employee stock plans 65
Access to creche help with the cost of childcare 59
Opportunities for foreign travel 50
Company car 43
Chart 17 Workplace retirement plans are a relatively low priority for younger workers when choosing a job How important to you would the following workplace benefits be if you were choosing your next job
ase 20-29 year olds
Q
B
Regarding workplace benefits provided by employers today considered just enough to fulfill basic needs and in China a
young employees are about as likely as all workers to be offered fully formed nationwide retirement system is still some way off
retirement tools such as annual plan statements and online The future shape and affordability of these plans is debated in
tools from their employer though it is concerning that 24 do all of the sur vey countries to var ying degrees
not know if such tools are available or not Those provided are
considered helpful Younger workersrsquo views on reform are important because
changes to government retirement benefits are more likely
The role of government to affect them than any other part of the working population
The generosity of government retirement benefits varies The main concern cited by 57 is of facing less generous
considerably in the countries sur veyed In some countries such government retirement benefits than those enjoyed by their
as France government benefits are the primar y mechanism parentsrsquo generation
for funding retirement while in the United Kingdom they are
The Young Pragmatic and Penniless Generation | 24
The government should reduce the overall cost of state pension provision by
reducing the value of Donrsquot know individual pension plans
25 22
4 The government should not do anything State pension provision will
remain perfectly affordable in the future
28
21 The government should increase overall funding
available for the state pension through
raising taxes
The government should take a balanced approach with some reductions in individual payments and
some increases in tax
Chart 18 Young workers think that the government retirement system will need to be reformed Q With the cost of government retirement benefits becoming a greater concern as people live longer which
if any of the following do you think the government should undertake
Base 20-29 year olds
The younger generation believes that the government cannot What do young employees look for in a retirement product continue to provide as it does now ndash just 4 think government The sur vey findings show that young employees have
benefits will remain affordable to society However there is no reser vations about employer and government retirement
consensus on what governments should do to reform retirement benefits So what then do they want from a private savings
plan systems Over a fifth (22) think retirement entitlements product The savings product feature most valued by younger
should be cut just over a fifth (21) think governments should workers is protection against investment risk (Char t 19)
raise taxes and more than a quarter (28) think a mixture of This may be in the form of no loss of initial investment a
the two is the best solution Another quarter admits that they guaranteed income stream or protection against inflation
donrsquot know what should be done This is reasonable ndash the initial investment of those farthest
from retirement is most at risk However less consideration
is given to savings grow th through investment returns This
suggests that there is an oppor tunity to educate young
workers about the trade-off between returns and risk
management and what they stand to gain
25 | The Young Pragmatic and Penniless Generation
Chart 19 Products which protect against investment risk are the most important to young workers ( interested) Q Thinking about the types of financial products you could purchase to help provide you with security in retirement on a scale of 1 to 5
how interested are you in the following options
Base 20-29 year olds
A product providing a guaranteed retirement income stream or lifetime income in retirement 82
A product which protects my retirement income against inflation 81
A product which guarantees that I donrsquot lose my initial investment 81
A product which helps meet the cost of long-term care if I become unable to look after myself 80
A product which protects my capital from poor investment returns 79
A product which generates a retirement income and allows me to take a lump sum from the investment should I need to 79
A product where the annual management charges are kept low 78
A product which enables me to keep some control over how my savings are invested during my retirement 77
A product which manages the asset allocation so that I am never exposed to a level of risk Irsquom not comfortable with 76
A product which continues to provide a retirement income to my spouse in the event that I die first 75
A product which protects my family against having to pay estate taxes when I die 72
A product which locks in investment returns during the good years 70
The lsquodefined ambitionrsquo retirement system in This removes some of the disadvantages of leaving
the Netherlands a sustainable retirement solution retirement liabilities exclusively up to employers
for young workers (defined benefit) or employees (defined contribution)
In the Netherlands as elsewhere young workers are faced In the Netherlands this is likely to involve legislation which
with an increasing retirement age decreasing government lets retirement funds automatically adjust pay-outs and
suppor t for retirement and declining traditional defined retirement age as life expectancy changes xii
benefit employer retirement plans Reforms proposed
by the Dutch may show a way for ward for all mature and This model has garnered interest elsewhere In the
aging economies United Kingdom Pensions Minister Steve Webb expressed
interest on a more limited scale with a government
rsquoDefined ambitionrsquo proposes that risks are not taken on fully guarantee for a minimum rate of return for defined
by either employer or employee but are shared contribution retirement plans
The Young Pragmatic and Penniless Generation | 26
Recommendations Enabling young workers to save The studyrsquos findings reveal that the majority of young workers (66) are either saving consistently or aspire to start saving but face challenges including debt low pay and funding for significant life events and generational changes to the economic landscape and government and employer support If young people are to achieve a prosperous retirement their willingness to save should be met with better opportunities to save Here is what can be done by employers governments and young people themselves to address retirement planning concerns for younger adults
27 | The Young Pragmatic and Penniless Generation
Individuals Employers and governments
Determine how much income you need in retirement Auto-enroll employees into a workplace retirement plan Young people accept the need to save for retirement but donrsquot If an auto-enrollment workplace retirement plan is feasible
know how to act on that need They can become more retirement this can play a major role in getting young workers saving early
savvy simply by talking to friends and family (as do 24 of and regularly Combined with auto-escalation (the automatic
our respondents already) or employers going online to use annual increase in retirement plan contributions) and matching
retirement calculators or reading the personal finance media contributions it can lead to greater retirement readiness
Seek out a financial advisor Provide more flexible savings products through the workplace Young people are faced with life events that make it easy to Not all savings journeys start with a retirement plan particularly
feel overwhelmed by financial priorities in addition to retirement for young people who may think of retirement as lsquotoo far awayrsquo
planning Soliciting advice from a finance professional early in Employers can kick-start the savings habit in younger workers
life (17 of young employees have done so already) helps with by providing flexible easy to access and easy to understand
planning and priorities and making sense of long-term finances savings plans as a more attractive starter option
Start saving now and save consistently Make company retirement plans more portable As with all employees young people will strengthen their Young people move jobs much more often than previous
retirement readiness simply by saving regularly Today only 25 generations of employees so savings like DC retirement plans
of young people always save yet even small regular amounts need to follow employees when they change jobs
will improve retirement readiness over time
Make tax incentives more effective Ask your employer about workplace retirement savings plans All countries encourage long-term savings through tax relief but
and other retirement benefits young people often arenrsquot aware of this or donrsquot understand it
While one third (33) of young people believe that a workplace A more targeted system of tax relief could help provide clearer
retirement savings plan provides a major opportunity to start and simpler signals to younger people about the financial
saving employers often experience difficulties in engaging benefits of long-term saving
younger employees in discussions about retirement planning
The workplace is an important channel for achieving retirement Make better financial education central to the workplace readiness so be sure to max out on any employer contributions retirement offer
Young people who aspire to save may be prevented from
doing so by setting the wrong financial priorities Workplace
retirement education ndash alongside professional advice ndash can help
guide young people toward the right long-term priorities at an
earlier age in life
The Young Pragmatic and Penniless Generation | 28
29 | The Young Pragmatic and Penniless Generation
Glossary
Aegon Retirement Readiness Index (ARRI) c areer average retirement plan The ARRI assesses the relative levels of retirement A type of defined benefit plan that is based on an
preparedness of employees across different countries on a employeersquos average retirement earnings over the duration
scale from 1 to 10 The Index is based on three questions of plan membership Same as average salary plan
covering attitudes and three questions covering behaviors
defined ambition (DA) plan average salary plan A type of retirement plan in which retirement plan risks
A type of defined benefit plan that is based on an are shared between the employer and the employee
employeersquos average retirement earnings over the duration It offers greater certainty to savers around the final value
of plan membership Same as career average plan of their retirement assets than in DC plans and less
cost volatility for employers than with DB plans In the
a nnuity Netherlands Defined Ambition (DA) retirement plans are
A form of contract sold by life insurance companies that being introduced in order to help relieve the pressure on
guarantees a fixed or variable payment to the annuitant employers while still trying to provide employees with a
at some future time usually retirement All capital in the more secure retirement plan The United Kingdom too is
annuity grows tax-deferred looking at DA retirement plans as a solution
auto enrollment defined benefit (DB) plan An employer-sponsored retirement plan in which the An employer-sponsored retirement plan where the amount
employer is able to enroll an employee without that of future benefits an employee will receive from the plan is
employeersquos express authorization The employer determines defined typically by a formula based on salary history and
what percentage of the employeersquos salary or wages is years of service The amount of contributions the employer
contributed to the plan The employee is able to change is required to make will depend on the investment returns
this percentage and can opt out of enrollment in the plan experienced by the plan and the benefits promised
Contrast defined contribution plan
a uto-escalation A feature of a plan which automatically increases the defined contribution (DC) plan percentage of (retirement) funds saved from salary An employer-sponsored retirement plan such as a 401(k)
This feature generally uses a default or standard plan or a 403(b) plan in the United States in which
contribution escalation rate contributions are made to individual participant accounts
Depending on the type of DC plan contributions may be
B aby Boomers made by the employee the employer or both
A term used to refer to people generally born between
the end of World War II in 1945 and the mid 1960s The employeersquos benefits at retirement or termination of
Other generations Silent Generation - the generation born employment are based on the employee and employer
between 1925 and 1945 Generation X - the generation contributions and earnings and losses on those
born between 1965 and 1979 Millennials or Generation contributions See also 401(k) and 403(b) plan
Y - the generation born between 1980 and 2000 and often Contrast defined benefit plan
classified as the children of Baby Boomers
The Young Pragmatic and Penniless Generation | 30
401(k) plan An employer sponsored retirement plan that enables
employees to make tax-deferred contributions from their
salaries to the plan
403(b) plan An employer-sponsored defined contribution plan that
enables employees of universities public schools and
non-profit organizations to make tax-deferred contributions
from their salaries to the plan
final salary plan A type of defined benefit plan in which retirement
benefits are based on final retirement salary in the years
immediately before retirement benefits are received
Millennials A term used to refer to the people born from about 1980
to 2000 brought up using digital technology They are
often classified as the children of Baby Boomers
r etirement (or pension) plan Provides replacement for salary when a person is no
longer working due to retirement In the case of a defined
benefit retirement plan the employer or union contributes
to the plan which pays a predetermined benefit for the
rest of the employeersquos life based on length of service and
salary Payments may be made either directly or through
an annuity Retirement plan payments are taxable income
to recipients in the year received The employer or union
has fiduciary responsibility to invest the retirement plan
funds in stocks bonds real estate and other assets earn
a satisfactory rate of return and make payments to retired
workers Retirement plan funds holding trillions of dollars
are one of the largest investment forces in the stock
bond and real estate markets If the employer defaults in
the United States retirement plan payments are usually
guaranteed by the Pension Benefit Guaranty Corporation
(PBGC)
variable annuities (VA) An insurance contract in which the insurance company
guarantees a minimum payment at the end of the
accumulation period The payments may vary depending
on the financial performance of the managed portfolio
31 | The Young Pragmatic and Penniless Generation
About Aegon Transamerica Center for Retirement Studiesreg and Cicero Consulting
Aegon Transamerica Center Aegon is an international life insurance pensions and asset reg management company with businesses in over 20 markets for Retirement Studies in the Americas Europe and Asia Aegon companies employ The Transamerica Center for Retirement Studiesreg (TCRS) is
around 24000 people and serve millions of customers a division of the Transamerica Institute a nonprofit private
worldwide foundation TCRS is dedicated to educating the public on
wwwaegoncom emerging trends surrounding retirement security in the
United States TCRSrsquo research emphasizes employer-sponsored
In 2010 Aegon became a founding member of the Global retirement plans issues faced by small to mid-sized companies
Coalition on Aging which seeks to raise awareness of aging and their employees and the implications of legislative and
issues among policymakers and the general public A major aim regulatory changes Transamerica Institute is funded by
of the coalition is to transform the way we think and speak contributions from Transamerica Life Insurance Company and
about aging replacing the familiar rhetoric of lsquoproblemsrsquo with its affiliates and may receive funds from unaffiliated third-
a more positive discussion of lsquopossibilitiesrsquo and lsquoopportunitiesrsquo parties For more information about TCRS please refer to
wwwglobalcoalitiononagingcom wwwtransamericacenterorg
Cicero Consulting A leading consultancy firm serving the banking insurance and
asset management sector Cicero specializes in public policy
and communications consulting as well as global thought
leadership and independent market research Cicero was
established in 2001 and now operates from offices in London
Brussels Washington and Singapore As a market leader in
pensions and retirement research Cicero designed
and analyzed the research and contributed to the report
wwwcicero-groupcom
The Young Pragmatic and Penniless Generation | 32
Marta acebo Mark Green Patricia Plas
Paula alvarez douGlas henck scott roane
Frits bart wendel hoFMan thurstan robinson
Grace basile
lynette belFry
andrew berwick
Frans van der horst
tatsuo kai
herMan kaPPelle
Patti rowey
sarah russell
Joost van schaGen
robin boon Gaacutebor kePecs dick schiethart
bert-JaaP brons Marco keiM erik schouten
douG brooks
libby buet
kent callahan
JaiMe kirkPatrick
bas knol
roGer koch
anGela seyMour Jackson
kate sMith
renske stoker
Jeanne de cervens
dana chen
Peter kunkel
alexander kuiPers
eyleen sun
MartiJn tans
arkadiusz chMurzynski
heidi cho
brian lewis
Mike linder
GreG tucker
Mark twiGG
siMon clow siMon luke catherine wanG
robert colliGnon Jason Ma Marc van weede
catherine collinson GrzeGorz Mathea tiM willaert
wendy daniels
Michel denizot
edit drevenka
Paul Middleton
takaoh MiyaGawa
david Moulton
daniel wriGht
alex wynaendts
MacieJ zaPala
Jan driessen
kelly Fu
adrian Grace
Mark Mullin
Marcelle noltenius
stiG nybo
Peacuteter zatykoacute
vicky zeldin
Disclaimer This repor t contains general information only and does
not constitute a solicitation or offer No rights can be
derived from this repor t Aegon its par tners and any of
their affiliates or employees do not guarantee warrant
or represent the accuracy or completeness of the
information contained in the repor t
Acknowledgements
33 | The Young Pragmatic and Penniless Generation
References and notes i For a comparison of different retirement systems see lsquoPensions at a Glance 2011rsquo OECD 2011 ii As the survey was carried out online the survey results in China are based toward people living in urban areas iii ldquoPensions Marketsrdquo TheCityUK March 2013 p9 iv Global Employment Trends for Youth 2013 A generation at risk International Labour Organisation 2013 p2 v Eurostat July 2013 vi OECD Employment and Labour Markets Key Tables from OECD No 2 2012 vii The Federal Reserve Bank of New York 2012 Quarterly Report on Household Debt March 29 2013 viii World Bank ix lsquoWorld-class povertyrsquo The Economist February 27 2013
httpwwweconomistcomblogsanalects201302chinas-poor x lsquoThe Chinese slow down in char tsrsquo The Economist July 15 2013 xi lsquoChina rsquos welfare system difficult inflexible and blatantly unfairrsquo The Guardian April 23 2013
httpwwwtheguardiancomglobal-development2013apr23china-welfare-system-inflexible-unfair xii lsquo The Dutch experience with Defined Ambition pensions and the impact on companiesrsquo Aegon Global Pensions March 12 2013
httpwwwaegonglobalpensionscomenHomePublicationsNews-archiveNewsThe-Dutch-experience-with-Defined
Ambition-pensions-and-what-that-may-mean-for-companies-in-the-Netherlands-and-the-UK
shy
The Young Pragmatic and Penniless Generation | 34
Contact information HE ADQUARTER S
Aegon NV
PO Box 85
2501 CB The Hague
Telephone +31 70 344 32 10
w w waegoncom
MEDIA REL ATIONS
Telephone +31 70 344 89 56
Email gcc-iraegoncom
Countr y Index score
Germany 548
China 541
Canada 524
United States 519
The Netherlands 488
United Kingdom 486
Sweden 483
France 475
Hungar y 473
Poland 463
Spain 440
Japan 430
Total 489
Appendix 1 Aegon Retirement Readiness Index (ARRI) - technical note
Aegon Retirement Readiness Index (ARRI)-technical note 2013 Weightings (2012 in brackets) A sample of 12000 pre and post retirees was drawn from 1 Personal responsibilit y 20 (30)
twelve countries Of these 10800 (90) were pre-retirees 2 Level of awareness 30 (35)
and these were chosen for fur ther analysis of their plans 3 Financial capability Understanding 30 (25)
for retirement The Index that was developed forms an 4 Retirement planning 50 (50)
assessment of how well an individual perceives the adequacy 5 Financial preparedness 60 (60)
of his her own finances and financial awareness specifically 6 Income replacement 35 (35)
for addressing his retirement needs
Note that the weights devised to show the relative
The lsquotargetrsquo for the Index impor tance of each question in calculating the Index add to
The question on current savings activity was designated as the 225 These were then re-scaled so that a final scale of 1 to
target question (dependent variable) for predicting the level of 10 was calculated
preparedness for retirement Responses to this question were
then correlated with each of the six key questions (variables) Final scores by country below to understand which were driving the activity These weightings were multiplied by the actual scores for each
This was done because it was not felt to be correct to give respondent for each of the six Index questions and aggregated
each of the six variables described below an equal weight as to obtain a provisional score This was then adjusted to
they appeared to have quite different relationships to the give countr y scores out of 1 to 10 (A score of 1 to 10 had
target question sufficient differentiation to be used as the scale for analysis)
1 Personal responsibilit y for income in retirement
2 Level of awareness of need to plan for retirement
3 F inancial capability Understanding of financial matters
regarding plans for retirement
4 Retirement planning Level of development of plans
5 Financial preparedness for retirement
6 Income replacement Level of projected income replacement
The weighting To estimate the statistical significance of the decline in overall
scores in this yearrsquos Index is theoretically incalculable
Two things have changed from 2012 to 2013
1 C anada and China have joined the sample
2 The new countries have thus influenced the weights of
emphasis placed on the 6 variables used to calculate
the score hence the weights attached to the complex
calculation have changed
However it is noticeable that for countries which were sampled
in both time periods the mean scores for the six individual
variables have almost invariably declined and on average more
than half of them have shown a significant level of decline
In particular the question lsquoDo you think you will achieve this
incomersquo has for all countries shown a significant level of
decline We thus hypothesize that the comparative results
show a significant decline
The Young Pragmatic and Penniless Generation | 36
Net
herl
ands
Net
herl
ands
Net
herl
ands
Ger
man
yG
erm
any
Ger
man
yBase 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
Better off 7 4 23 Sw
eden
Swed
en11 5 7 8 3 11 14 50 5
Swed
en
About the same 19 18 27 23 8 19 18 13 29 29 24 21 U
ntie
dU
ntie
dU
nite
d Worse off 66 74 41 58 79 69 71 76 51 47 21 55
Kin
gdom
Kin
gdom
Kin
gdom
Donrsquot know 9 3 9 9 9 4 4 8 9 10 6 19
Fran
ceFr
ance
Fran
ce
Chart 2 Education of 20 ndash 29 year olds by country Q Please choose from the following list the highest level of educational or professional qualification you have
Spai
nSp
ain
Spa
in
Pol
and
Pol
and
Pol
and
Hun
gary
Hun
gary
Hun
gar y
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
dU
nite
d 100 100 100 100 100 100 100 100 100
Stat
es100 100 100
Stat
esSt
ates
Less than high school graduate 2 44 6 14 1 3 2 7 1 3 Ca
nada
Cana
daC
anad
aHigh school graduate 11 33 53 23 22 22 4 41 14 21 1 2
Some college or trade school 46 2 9 9 9 19 37 14 28 20 4 33 Ch
ina
Chin
aC
hina
College degree University degree 31 15 27 30 41 43 21 33 50 46 9 57
Postgraduate degree or 8 3 3 23 25 11 36 1 8 9 80 6 qualification Ja
pan
Japa
n Ja
pan
Other 2 4 1 1 1 2 0 5 0 6 2
None 0 1 1 0 1 0 0
NET Less than undergrad degree 61 82 70 47 34 46 43 66 42 45 11 37
NET Undergrad degree or higher 39 18 30 53 66 54 57 34 58 55 89 63
Chart 3 Aegon Retirement Readiness Index scores for young employees by country
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
NET Low Index (0-5) 80 64 79 81 85 78 81 73 65 61 61 87
NET Medium Index (6-7) 15 30 18 15 14 21 17 23 25 31 31 12
NET High Index (8-10) 4 6 3 3 1 2 2 4 10 8 7 1
Appendix 2 Country comparisons Chart 1 The majority of young employees believe that they will be worse off in retirement compared to their parents Q Do you think that future generations of retirees will be better off or worse off than those currently in retirement
37 | The Young Pragmatic and Penniless Generation
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsI always make sure that 27 34 27 26 17 14 19 22 35 33 32 20 I am saving for retirement
I only save for retirement G
erm
any
Ger
man
y21 27 20 13 17 21 16 6 17 24 20 24 occasionally from time to time
I am not saving for retirement now 6 11 8 11 5 15 9 4 10 8 9 5 although I have in the past Sw
eden
Swed
en
I am not saving for retirement 35 23 34 46 53 40 49 54 36 33 38 46 though I do intend to U
nite
dU
ntie
dK
ingd
omK
ingd
om I have never saved for retirement and 11 6 10 5 8 10 6 13 3 2 1 6 donrsquot intend to
Fran
ceFr
ance
Chart 5 Younger people are more likely not to be using any means of retirement savings Sp
ain
Spai
nQ Which financial means if any are you currently using to prepare for your retirement
Pol
and
Pol
and
only asked in Germany only asked in Spain
Hun
gary
Hun
gary
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
dSt
ates
Stat
es100 100 100 100 100 100 100 100 100 100 100 100
Defined benefit plan 16 10 25 29 15 3 76 11 20 13 5 Ca
nada
Cana
daDefined contribution plan 28 10 17 19 19 14 10 23 40 7 3
Private pension 8 18 14 10 5 9 4 13 12 40 66 4 Ch
ina
Chin
a Government pension social security 12 43 14 21 8 7 4 18 27 33 71 35
Stocks 5 12 14 7 4 17 7 2 13 10 23 9
Bonds 1 8 5 6 2 16 4 2 8 13 14 3 Ja
pan
Japa
n
Mutual funds 2 14 23 4 2 10 3 4 7 16 9 6
Investment insurances (annuities) 2 3 2 3 2 9 4 5 2 4 6 1
Savings accounts 23 37 38 25 23 6 29 15 36 37 65 36
Investment property 2 10 6 7 9 2 5 2 5 11 18 1
Employee stock purchase 1 1 1 4 1 29 0 4 1 7 1
My home 10 5 8 7 7 8 4 6 6 14 30 1
Reverse mortgage 1 4 2 4
My business 2 1 3 2 2 4 1 1 2 4 12 1
Inheritance 3 11 7 11 7 9 9 8 7 9 6 2
Annuities 1 15 2 2 1 4 3 2 1 2 8
Long-term care insurance 2 1 3 2 9 5 1 6 4 7 1
Life insurance 6 11 8 8 14 3 18 15 19 18 36 17
Unterstuumltzungskasse aus 2 Eigenmitteln finanziert
Unterstuumltzungskasse vom 2 Arbeitgeber finanziert
Chart 4 Younger employees are much more likely to aspire to save for retirement Which of the following best explains your approach to saving for retirement This can include money you contribute to any long-term
investment including pensions stocks and shares investment-linked insurances property etc
Q
The Young Pragmatic and Penniless Generation | 38
Plan de empleo mixto 2 (combinacioacuten de las dos anteriores)
Other 1 6 4 0 1 2 2 3 2 2 3 3
None nothing 8 14 12 23 25 31 6 27 21 17 3 24
Donrsquot know 29 6 17 13 19 8 4 9 7 7 0 9
hart 6 The younger generation has more negative associations of retirement Which if any of the following words do you most associate with retirement
Net
herl
ands
Net
herl
ands
Ger
man
yG
erm
any
Swed
enSw
eden
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
d100 100 100 100 100 100 100 100 100 100 100 100
Kin
gdom
Kin
gdom
Freedom 35 32 36 39 19 26 11 20 35 40 37 33
Opportunity 7 27 25 18 4 8 9 10 17 16 9 16 Fr
ance
Fran
ceLeisure 58 48 36 41 23 24 43 32 50 50 55 6
Excitement 2 5 3 8 2 6 1 2 17 17 4 3 Sp
ain
Spai
nPoverty 11 26 23 11 26 14 37 44 7 5 6 20
Insecurity 34 24 18 16 20 18 35 56 10 9 18 44 P
olan
dP
olan
dLoneliness 4 10 17 16 12 7 11 8 5 9 20 12
Ill health 2 19 7 14 15 9 49 23 6 6 29 11 H
unga
ryH
unga
ryDependent on others 11 11 5 18 14 8 18 19 14 6 11 4
Tired 3 4 8 10 14 10 17 6 7 7 13 19 U
nite
dU
nite
dFar away 38 19 25 21 61 32 2 13 33
Stat
es33 14 22
Stat
es
Boredom 14 16 6 12 16 12 15 8 12 12 16 17 Ca
nada
Cana
daEnjoyment 21 16 17 23 14 29 5 3 37 37 35 15
None of the above 0 1 1 2 0 2 1 1 2 2 1 2
Donrsquot know 2 2 3 3 2 2 1 2 0 Ch
ina
6 Ch
ina
hart 7 Many young employees think they are not on course to achieve target retirement income Ja
pan
Japa
n Do you think you will achieve this income [your estimated income needed in retirement]
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
I donrsquot know if I am on course to 56 37 57 59 50 39 49 48 48 41 22 68 achieve my retirement income
No I am on course to achieve around one-quarter (25) of my 10 14 9 13 15 14 14 13 10 10 10 7 retirement income
No I am on course to achieve around 12 20 14 11 19 19 18 15 12 11 23 12 half of my retirement income
No I am on course to achieve around three-quarters (75) of my 8 14 7 4 8 15 9 8 6 11 20 5 retirement income
Yes I am on course to achieve my 15 15 13 14 8 13 11 17 25 27 25 8 retirement income
CQ
CQ
39 | The Young Pragmatic and Penniless Generation
Chart 8 Young people in most countries expect to retire before 65 Q At what age do you expect to retire from all paid employment
Net
herl
ands
Ger
man
y
Swed
en
Uni
ted
Kin
gdom
Fran
ce
Spai
n
Pol
and
Hun
gary
Uni
ted
Stat
es
Cana
da
Chin
a
Japa
n
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
40 or under 0 1 1 0 0 1 3 1 5 12
41-50 1 2 3 5 2 2 6 3 9 4 37 9
51-59 4 4 4 6 2 4 11 5 7 10 30 1
60 5 11 8 12 10 13 19 12 12 16 21 27
61-64 2 11 10 2 20 7 4 13 5 3 1 2
65 17 22 44 31 34 32 16 26 26 32 3 25
66-69 42 32 15 9 12 29 20 13 9 9 0 1
70 19 11 10 18 10 5 10 9 13 12 0 6
71+ 5 5 5 9 4 5 5 3 7 5 1 4
Never 2 1 1 2 2 2 6 4 1 0 0
Donrsquot know 2 3 2 5 3 2 8 9 5 5 1 13
Mean 67 65 65 65 64 65 63 64 63 64 53 59
Median 67 65 65 65 65 65 65 65 65 65 55 60
Chart 9 Younger employees feel they donrsquot have money to invest for retirement Q What is the single biggest obstacle to you saving for retirement right now
Net
herl
ands
Ger
man
y
Swed
en
Uni
ted
Kin
gdom
Fran
ce
Spai
n
Pol
and
Hun
gary
Uni
ted
Stat
es
Cana
da
Chin
a
Japa
n
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
The uncertain economic environment 19 8 13 9 13 19 11 14 12 9 29 27
Lack of money to invest 28 41 33 43 47 34 48 55 47 50 6 19
Fear of poor investment returns over the coming years 2 5 10 7 5 6 8 2 6 8 14 6
Complexity of investment products 4 4 4 3 5 3 5 2 12 5
I donrsquot know how to go about investing for the long-term 2 3 10 8 5 5 3 3 6 8 7 9
The fees charged by financial services companies 2 4 4 2 4 3 4 2 3 5 2 5
I canrsquot afford to take financial advice 3 3 6 8 2 4 3 5 3 2 3 2
I donrsquot trust the financial services industry 12 11 8 6 5 10 6 2 2 3 5 4
I donrsquot see the need to save for the long-term 6 1 2 2 3 3 3 1 2 1 4 3
Concerns about unstable currencies currency fluctuations 2 5 1 3 3 3 4 3 4 5 15 2
Other (PLEASE STATE) 3 3 1 1 3 2 4 6 2 2 1
Donrsquot know 17 12 11 7 8 6 3 6 8 6 3 17
The Young Pragmatic and Penniless Generation | 40
Chart 10 More money would incentivize young employees to save for retirement Q Which if any of the following would encourage you to save for retirement
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsMore generous tax breaks on long-term savings and pensions 20 44 30 32 27 23 42 42 33 43 40 32 products
Ger
man
yG
erm
any
Access to financial education so that I am more aware of what 24 6 14 21 16 22 21 12 23 24 43 25 I need to do for myself
Swed
enSw
eden
Access to professional financial advice so that I have personalized
Uni
ted
20 24 23 23 15 21 25 9 22 23 44 13 U
nite
drecommendations on what steps
Kin
gdom
Kin
gdom
I need to take
Simpler investment products that 12 33 19 28 20 Fr
ance
18 27 16 32 28 36 10 Fr
ance
I can understand with less jargon
Better and more frequent information about my retirement 16 28 20 27 27 23
Spai
n20 18 25 31 45 22
Spai
nsavings
Better legal protection in case I am 12 18 13 18 10 24 18 13 13 19 21 6 P
olan
dP
olan
dsold the wrong product
A pay rise 46 54 44 64 55 50 70 72 67 64 53 37
A better retirement plan pension H
unga
ryH
unga
ry27 32 25 33 29 26 42 35 39 44 33 32 match from my employer
Other 4 2 1 1 2 2 3 3 2 U
nite
d3 0
Uni
ted
Stat
esSt
ates
Donrsquot know 17 9 16 10 10 12 3 8 8 5 3 17
Not applicable - I already have 3 3 4 2 2 1 1 1 2 2 3 sufficient savings Ca
nada
Cana
da
Chin
aCh
ina
Chart 11 A majority of younger employees do not have a written plan for retirement Q Which of the following best describes your retirement planning strategy
Japa
n Ja
pan
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
I have a written plan 7 18 10 9 6 8 6 5 13 10 8 4
I have a plan but it is not written 24 47 37 25 23 31 29 31 37 44 55 24
down
I do not have a plan 61 32 51 61 62 55 62 58 45 42 34 61
Donrsquot know 7 3 3 5 8 6 3 6 4 4 3 12
41 | The Young Pragmatic and Penniless Generation
Chart 12 For young employees friends and family are the leading source of retirement savings information Q And which of these sources (of information) is most important to you
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
Bank adviser 6 11 19 5 25 5 7 4 3 17 10 2 N
ethe
rlan
dsN
ethe
rlan
dsProfessional financial adviser 12 22 10 12 10 19 19 22 21 25 19 10
Insurance agent spokesperson 3 10 2 3 1 3 6 2 3 0 3 2 G
erm
any
Ger
man
yInsurance company website 3 1 3 2 4 4 2 2 1 3 1
Personal finance websites online 8 5 7 8 5 4 10 8 12 6 10 8 retirement planning tools Sw
eden
Swed
enPersonal finance media 2 2 2 2 2 6 3 1 2 1 6 2
Government website 7 1 3 6 U
nite
d5 2 3 3 2 3 7 1
Uni
ted
Kin
gdom
Kin
gdom
Bank website 2 3 3 2 1 0 3 2 1 6 3 3
My employer 12 8 4 9 4 7 5 12 8 5 4 1 Fr
ance
Fran
ceAccountant 2 6 4 4 1 3 1 3 5 5 1 3
Lawyer 2 3 1 2 2 8 4 2 1 2 2 0 Sp
ain
Spai
nFriends and family 21 22 30 28 24 26 18 24 26 20 25 24
None of these P
olan
dP
olan
dNot applicable 21 7 16 18 19 13 17 15 14 9 5 41
Hun
gary
Hun
gary
Chart 13 Most young workers feel their employer should provide some kind of pension Q In the future what if anything should employers do to help people plan for retirement
Uni
ted
Uni
ted
Stat
esSt
ates
Cana
daCa
nada
Chin
aCh
ina
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 Ja
pan
Japa
n Employers should be required to 24 43 20 40 21 26 20 28 37 34 20 30 contribute to workersrsquo pensions
Employers should be required to make a pension available but not to 12 13 7 17 20 15 15 4 11 14 22 5 contribute into it
Employers should not be required to provide pensions but should 15 9 12 8 9 8 11 6 11 9 9 11 provide information on how to plan for retirement
Employers should provide a range of flexible benefits and 13 18 18 16 15 27 25 28 21 22 45 12 allow individuals to choose which benefits they actually want
Nothing ndash it should be left to individual employees to take care 2 2 5 1 4 3 3 5 6 5 1 9 of themselves
Nothing ndash it should be left to the government to take care of its 2 5 5 2 5 8 15 14 1 4 0 4 citizens
Donrsquot know 30 10 32 17 27 12 12 15 13 13 3 29
The Young Pragmatic and Penniless Generation | 42
Chart 14 Workplace pensions are relatively low down in young workersrsquo priorities when choosing a job Q How important to you would the following workplace benefits be if you were choosing your next job
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsBasic salary 86 93 88 91 88 92 90 94 90 93 96 94
Holiday entitlement 87 94 89 91 92 94 91 94 93 94 96 91 G
erm
any
Ger
man
yOvertime and bonus pay 86 93 87 88 89 90 89 94 90 91 97 90
Location of workplace 88 91 86 92 89 90 89 92 93 93 92 86 Sw
eden
Swed
enMedical health insurance 73 92 84 65 86 87 88 87 93 94 98 83
Opportunities for career progression 86 91 81 90 90 94 91 94 92 91 96 81 U
nite
dU
nite
dAccess to a workplace retirement 85 85 81 82
Kin
gdom
78 84 80 78 84 86 93 74 K
ingd
omplan with employer contributions
Access to good training provision 85 87 85 88 86 91 85 93 86 90 95 74 Fr
ance
Fran
ceFlexible working hours 79 87 58 86 81 89 81 87 91 91 92 57
Life insurance 72 75 79 69 80 82 Sp
ain
84 80 81 88 93 74 Sp
ain
(death in service benefits)
Phased retirement or other employer programs providing for 74 54 75 71 72 81 76 74 76 81 91 65
Pol
and
Pol
and
a transition into retirement
Ability to work past the normal 68 57 64 65 64 74 72 65 74 76 80 70 retirement age H
unga
ryH
unga
ry
Access to a workplace retirement 62 74 61 68 59 77 61 47 68 74 89 65 plan without employer contributions U
nite
dU
nite
dSt
ates
Stat
esEmployee share plans 50 72 54 65 59 73 61 51 64 73 91 55
Access to creche help with the 67 75 64 56 69 79 75 83 58 69 89 68 cost of childcare Ca
nada
Cana
da
Opportunities for foreign travel 53 54 60 55 50 71 58 66 57 61 79 37
Company car 51 46 45 47 49 63 51 49 36 49 69 Ch
ina
39 Ch
ina
Japa
n Ja
pan
Chart 15 Young workers think the state pension will need to be reformed Q With the cost of government pensions becoming a greater concern as people live longer which if any of the following do you think
the government should undertake
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
The government should reduce the overall cost of state pension 15 33 16 15 16 20 28 22 21 26 30 16 provision by reducing the value of individual pension plans
The government should increase overall funding available for the 12 21 30 22 14 34 19 26 21 18 29 10 state pension through raising taxes
43 | The Young Pragmatic and Penniless Generation
he government should take a alanced approach with some 27 26 12 30 28 23 24 16 34 31 38 41 eductions in individual payments nd some increases in tax
he government should not do nything State pension provision 7 2 12 5 3 4 3 3 5 4 0 5 ill remain perfectly affordable in he future
onrsquot know 38 19 29 29 39 20 26 34 19 21 4 28
Net
herl
ands
art 16 Products which protect against investment risk are the most important to young workers ( interested) Thinking about the types of financial products you could purchase to help provide you with security in retirement on a scale of 1 to 5
how interested are you in the following options G
erm
any
Swed
en
Uni
ted
Kin
gdom
ase 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 Fr
ance
100 100 100 100 100 100 100 100 100 100 100 100
product providing a guaranteed etirement income stream or 75 81 73 76 74 83 78 76 87 85 94 69
Spai
nifetime income in retirement
product which protects my 74 79 73 76 72 82 77 74 84 86 94 65 etirement income against inflation P
olan
d
product which guarantees that I 72 82 73 78 75 81 76 73 86 86 90 67 onrsquot lose my initial investment H
unga
ry product which helps meet the ost of long-term care if I become 74 79 74 77 70 79 76 71 86 85 84 66
Uni
ted
nable to look after myself St
ates
product which protects my capital 71 81 71 76 68 76 77 73 84 83 93 65 rom poor investment returns Ca
nada
product which generates a etirement income and allows 69 78 71 75 68 81 77 72 84 86 94 70 e to take a lump sum from the
Chin
anvestment should I need to
product where the annual 66 78 68 75 72 79 77 70 85 86 87 64 anagement charges are kept low Ja
pan
product which enables me to eep some control over how my 71 73 70 75 72 80 75 69 88 85 91 63 avings are invested during my etirement
product which manages the sset allocation so that I am never 68 70 67 73 66 76 71 67 80 83 95 60 xposed to a level of risk Irsquom not omfortable with
product which continues to rovide a retirement income to my 74 78 71 75 73 81 79 73 86 82 94 60 pouse in the event that I die first
product which protects my family gainst having to pay estate taxes 73 76 71 74 75 81 75 69 82 82 89 56 hen I die
product which locks in investment 72 71 63 73 64 71 59 56 81 84 89 61 eturns during the good years
Tbra
Tawt
D
ChQ
B
Arl
Ar
Ad
Acu
Af
Armi
Am
Aksr
Aaec
Aps
Aaw
Ar
The Young Pragmatic and Penniless Generation | 44
Basic salary 94
93 Holiday entitlement
91 Overtime and bonus pay
91 Location of workplace
88 Medical health insurance
87 Opportunities for career progression
Access to a workplace retirement plan with employer contributions 87
Access to good training provision 86
Flexible working hours 85
Life insurance (death in service benefits) 81
Phased retirement or other employer programs providing for a transition into retirement 80
Ability to work past the normal retirement age 70
Access to a workplace retirement plan without employer contributions
67
Employee stock plans 65
Access to creche help with the cost of childcare 59
Opportunities for foreign travel 50
Company car 43
Chart 17 Workplace retirement plans are a relatively low priority for younger workers when choosing a job How important to you would the following workplace benefits be if you were choosing your next job
ase 20-29 year olds
Q
B
Regarding workplace benefits provided by employers today considered just enough to fulfill basic needs and in China a
young employees are about as likely as all workers to be offered fully formed nationwide retirement system is still some way off
retirement tools such as annual plan statements and online The future shape and affordability of these plans is debated in
tools from their employer though it is concerning that 24 do all of the sur vey countries to var ying degrees
not know if such tools are available or not Those provided are
considered helpful Younger workersrsquo views on reform are important because
changes to government retirement benefits are more likely
The role of government to affect them than any other part of the working population
The generosity of government retirement benefits varies The main concern cited by 57 is of facing less generous
considerably in the countries sur veyed In some countries such government retirement benefits than those enjoyed by their
as France government benefits are the primar y mechanism parentsrsquo generation
for funding retirement while in the United Kingdom they are
The Young Pragmatic and Penniless Generation | 24
The government should reduce the overall cost of state pension provision by
reducing the value of Donrsquot know individual pension plans
25 22
4 The government should not do anything State pension provision will
remain perfectly affordable in the future
28
21 The government should increase overall funding
available for the state pension through
raising taxes
The government should take a balanced approach with some reductions in individual payments and
some increases in tax
Chart 18 Young workers think that the government retirement system will need to be reformed Q With the cost of government retirement benefits becoming a greater concern as people live longer which
if any of the following do you think the government should undertake
Base 20-29 year olds
The younger generation believes that the government cannot What do young employees look for in a retirement product continue to provide as it does now ndash just 4 think government The sur vey findings show that young employees have
benefits will remain affordable to society However there is no reser vations about employer and government retirement
consensus on what governments should do to reform retirement benefits So what then do they want from a private savings
plan systems Over a fifth (22) think retirement entitlements product The savings product feature most valued by younger
should be cut just over a fifth (21) think governments should workers is protection against investment risk (Char t 19)
raise taxes and more than a quarter (28) think a mixture of This may be in the form of no loss of initial investment a
the two is the best solution Another quarter admits that they guaranteed income stream or protection against inflation
donrsquot know what should be done This is reasonable ndash the initial investment of those farthest
from retirement is most at risk However less consideration
is given to savings grow th through investment returns This
suggests that there is an oppor tunity to educate young
workers about the trade-off between returns and risk
management and what they stand to gain
25 | The Young Pragmatic and Penniless Generation
Chart 19 Products which protect against investment risk are the most important to young workers ( interested) Q Thinking about the types of financial products you could purchase to help provide you with security in retirement on a scale of 1 to 5
how interested are you in the following options
Base 20-29 year olds
A product providing a guaranteed retirement income stream or lifetime income in retirement 82
A product which protects my retirement income against inflation 81
A product which guarantees that I donrsquot lose my initial investment 81
A product which helps meet the cost of long-term care if I become unable to look after myself 80
A product which protects my capital from poor investment returns 79
A product which generates a retirement income and allows me to take a lump sum from the investment should I need to 79
A product where the annual management charges are kept low 78
A product which enables me to keep some control over how my savings are invested during my retirement 77
A product which manages the asset allocation so that I am never exposed to a level of risk Irsquom not comfortable with 76
A product which continues to provide a retirement income to my spouse in the event that I die first 75
A product which protects my family against having to pay estate taxes when I die 72
A product which locks in investment returns during the good years 70
The lsquodefined ambitionrsquo retirement system in This removes some of the disadvantages of leaving
the Netherlands a sustainable retirement solution retirement liabilities exclusively up to employers
for young workers (defined benefit) or employees (defined contribution)
In the Netherlands as elsewhere young workers are faced In the Netherlands this is likely to involve legislation which
with an increasing retirement age decreasing government lets retirement funds automatically adjust pay-outs and
suppor t for retirement and declining traditional defined retirement age as life expectancy changes xii
benefit employer retirement plans Reforms proposed
by the Dutch may show a way for ward for all mature and This model has garnered interest elsewhere In the
aging economies United Kingdom Pensions Minister Steve Webb expressed
interest on a more limited scale with a government
rsquoDefined ambitionrsquo proposes that risks are not taken on fully guarantee for a minimum rate of return for defined
by either employer or employee but are shared contribution retirement plans
The Young Pragmatic and Penniless Generation | 26
Recommendations Enabling young workers to save The studyrsquos findings reveal that the majority of young workers (66) are either saving consistently or aspire to start saving but face challenges including debt low pay and funding for significant life events and generational changes to the economic landscape and government and employer support If young people are to achieve a prosperous retirement their willingness to save should be met with better opportunities to save Here is what can be done by employers governments and young people themselves to address retirement planning concerns for younger adults
27 | The Young Pragmatic and Penniless Generation
Individuals Employers and governments
Determine how much income you need in retirement Auto-enroll employees into a workplace retirement plan Young people accept the need to save for retirement but donrsquot If an auto-enrollment workplace retirement plan is feasible
know how to act on that need They can become more retirement this can play a major role in getting young workers saving early
savvy simply by talking to friends and family (as do 24 of and regularly Combined with auto-escalation (the automatic
our respondents already) or employers going online to use annual increase in retirement plan contributions) and matching
retirement calculators or reading the personal finance media contributions it can lead to greater retirement readiness
Seek out a financial advisor Provide more flexible savings products through the workplace Young people are faced with life events that make it easy to Not all savings journeys start with a retirement plan particularly
feel overwhelmed by financial priorities in addition to retirement for young people who may think of retirement as lsquotoo far awayrsquo
planning Soliciting advice from a finance professional early in Employers can kick-start the savings habit in younger workers
life (17 of young employees have done so already) helps with by providing flexible easy to access and easy to understand
planning and priorities and making sense of long-term finances savings plans as a more attractive starter option
Start saving now and save consistently Make company retirement plans more portable As with all employees young people will strengthen their Young people move jobs much more often than previous
retirement readiness simply by saving regularly Today only 25 generations of employees so savings like DC retirement plans
of young people always save yet even small regular amounts need to follow employees when they change jobs
will improve retirement readiness over time
Make tax incentives more effective Ask your employer about workplace retirement savings plans All countries encourage long-term savings through tax relief but
and other retirement benefits young people often arenrsquot aware of this or donrsquot understand it
While one third (33) of young people believe that a workplace A more targeted system of tax relief could help provide clearer
retirement savings plan provides a major opportunity to start and simpler signals to younger people about the financial
saving employers often experience difficulties in engaging benefits of long-term saving
younger employees in discussions about retirement planning
The workplace is an important channel for achieving retirement Make better financial education central to the workplace readiness so be sure to max out on any employer contributions retirement offer
Young people who aspire to save may be prevented from
doing so by setting the wrong financial priorities Workplace
retirement education ndash alongside professional advice ndash can help
guide young people toward the right long-term priorities at an
earlier age in life
The Young Pragmatic and Penniless Generation | 28
29 | The Young Pragmatic and Penniless Generation
Glossary
Aegon Retirement Readiness Index (ARRI) c areer average retirement plan The ARRI assesses the relative levels of retirement A type of defined benefit plan that is based on an
preparedness of employees across different countries on a employeersquos average retirement earnings over the duration
scale from 1 to 10 The Index is based on three questions of plan membership Same as average salary plan
covering attitudes and three questions covering behaviors
defined ambition (DA) plan average salary plan A type of retirement plan in which retirement plan risks
A type of defined benefit plan that is based on an are shared between the employer and the employee
employeersquos average retirement earnings over the duration It offers greater certainty to savers around the final value
of plan membership Same as career average plan of their retirement assets than in DC plans and less
cost volatility for employers than with DB plans In the
a nnuity Netherlands Defined Ambition (DA) retirement plans are
A form of contract sold by life insurance companies that being introduced in order to help relieve the pressure on
guarantees a fixed or variable payment to the annuitant employers while still trying to provide employees with a
at some future time usually retirement All capital in the more secure retirement plan The United Kingdom too is
annuity grows tax-deferred looking at DA retirement plans as a solution
auto enrollment defined benefit (DB) plan An employer-sponsored retirement plan in which the An employer-sponsored retirement plan where the amount
employer is able to enroll an employee without that of future benefits an employee will receive from the plan is
employeersquos express authorization The employer determines defined typically by a formula based on salary history and
what percentage of the employeersquos salary or wages is years of service The amount of contributions the employer
contributed to the plan The employee is able to change is required to make will depend on the investment returns
this percentage and can opt out of enrollment in the plan experienced by the plan and the benefits promised
Contrast defined contribution plan
a uto-escalation A feature of a plan which automatically increases the defined contribution (DC) plan percentage of (retirement) funds saved from salary An employer-sponsored retirement plan such as a 401(k)
This feature generally uses a default or standard plan or a 403(b) plan in the United States in which
contribution escalation rate contributions are made to individual participant accounts
Depending on the type of DC plan contributions may be
B aby Boomers made by the employee the employer or both
A term used to refer to people generally born between
the end of World War II in 1945 and the mid 1960s The employeersquos benefits at retirement or termination of
Other generations Silent Generation - the generation born employment are based on the employee and employer
between 1925 and 1945 Generation X - the generation contributions and earnings and losses on those
born between 1965 and 1979 Millennials or Generation contributions See also 401(k) and 403(b) plan
Y - the generation born between 1980 and 2000 and often Contrast defined benefit plan
classified as the children of Baby Boomers
The Young Pragmatic and Penniless Generation | 30
401(k) plan An employer sponsored retirement plan that enables
employees to make tax-deferred contributions from their
salaries to the plan
403(b) plan An employer-sponsored defined contribution plan that
enables employees of universities public schools and
non-profit organizations to make tax-deferred contributions
from their salaries to the plan
final salary plan A type of defined benefit plan in which retirement
benefits are based on final retirement salary in the years
immediately before retirement benefits are received
Millennials A term used to refer to the people born from about 1980
to 2000 brought up using digital technology They are
often classified as the children of Baby Boomers
r etirement (or pension) plan Provides replacement for salary when a person is no
longer working due to retirement In the case of a defined
benefit retirement plan the employer or union contributes
to the plan which pays a predetermined benefit for the
rest of the employeersquos life based on length of service and
salary Payments may be made either directly or through
an annuity Retirement plan payments are taxable income
to recipients in the year received The employer or union
has fiduciary responsibility to invest the retirement plan
funds in stocks bonds real estate and other assets earn
a satisfactory rate of return and make payments to retired
workers Retirement plan funds holding trillions of dollars
are one of the largest investment forces in the stock
bond and real estate markets If the employer defaults in
the United States retirement plan payments are usually
guaranteed by the Pension Benefit Guaranty Corporation
(PBGC)
variable annuities (VA) An insurance contract in which the insurance company
guarantees a minimum payment at the end of the
accumulation period The payments may vary depending
on the financial performance of the managed portfolio
31 | The Young Pragmatic and Penniless Generation
About Aegon Transamerica Center for Retirement Studiesreg and Cicero Consulting
Aegon Transamerica Center Aegon is an international life insurance pensions and asset reg management company with businesses in over 20 markets for Retirement Studies in the Americas Europe and Asia Aegon companies employ The Transamerica Center for Retirement Studiesreg (TCRS) is
around 24000 people and serve millions of customers a division of the Transamerica Institute a nonprofit private
worldwide foundation TCRS is dedicated to educating the public on
wwwaegoncom emerging trends surrounding retirement security in the
United States TCRSrsquo research emphasizes employer-sponsored
In 2010 Aegon became a founding member of the Global retirement plans issues faced by small to mid-sized companies
Coalition on Aging which seeks to raise awareness of aging and their employees and the implications of legislative and
issues among policymakers and the general public A major aim regulatory changes Transamerica Institute is funded by
of the coalition is to transform the way we think and speak contributions from Transamerica Life Insurance Company and
about aging replacing the familiar rhetoric of lsquoproblemsrsquo with its affiliates and may receive funds from unaffiliated third-
a more positive discussion of lsquopossibilitiesrsquo and lsquoopportunitiesrsquo parties For more information about TCRS please refer to
wwwglobalcoalitiononagingcom wwwtransamericacenterorg
Cicero Consulting A leading consultancy firm serving the banking insurance and
asset management sector Cicero specializes in public policy
and communications consulting as well as global thought
leadership and independent market research Cicero was
established in 2001 and now operates from offices in London
Brussels Washington and Singapore As a market leader in
pensions and retirement research Cicero designed
and analyzed the research and contributed to the report
wwwcicero-groupcom
The Young Pragmatic and Penniless Generation | 32
Marta acebo Mark Green Patricia Plas
Paula alvarez douGlas henck scott roane
Frits bart wendel hoFMan thurstan robinson
Grace basile
lynette belFry
andrew berwick
Frans van der horst
tatsuo kai
herMan kaPPelle
Patti rowey
sarah russell
Joost van schaGen
robin boon Gaacutebor kePecs dick schiethart
bert-JaaP brons Marco keiM erik schouten
douG brooks
libby buet
kent callahan
JaiMe kirkPatrick
bas knol
roGer koch
anGela seyMour Jackson
kate sMith
renske stoker
Jeanne de cervens
dana chen
Peter kunkel
alexander kuiPers
eyleen sun
MartiJn tans
arkadiusz chMurzynski
heidi cho
brian lewis
Mike linder
GreG tucker
Mark twiGG
siMon clow siMon luke catherine wanG
robert colliGnon Jason Ma Marc van weede
catherine collinson GrzeGorz Mathea tiM willaert
wendy daniels
Michel denizot
edit drevenka
Paul Middleton
takaoh MiyaGawa
david Moulton
daniel wriGht
alex wynaendts
MacieJ zaPala
Jan driessen
kelly Fu
adrian Grace
Mark Mullin
Marcelle noltenius
stiG nybo
Peacuteter zatykoacute
vicky zeldin
Disclaimer This repor t contains general information only and does
not constitute a solicitation or offer No rights can be
derived from this repor t Aegon its par tners and any of
their affiliates or employees do not guarantee warrant
or represent the accuracy or completeness of the
information contained in the repor t
Acknowledgements
33 | The Young Pragmatic and Penniless Generation
References and notes i For a comparison of different retirement systems see lsquoPensions at a Glance 2011rsquo OECD 2011 ii As the survey was carried out online the survey results in China are based toward people living in urban areas iii ldquoPensions Marketsrdquo TheCityUK March 2013 p9 iv Global Employment Trends for Youth 2013 A generation at risk International Labour Organisation 2013 p2 v Eurostat July 2013 vi OECD Employment and Labour Markets Key Tables from OECD No 2 2012 vii The Federal Reserve Bank of New York 2012 Quarterly Report on Household Debt March 29 2013 viii World Bank ix lsquoWorld-class povertyrsquo The Economist February 27 2013
httpwwweconomistcomblogsanalects201302chinas-poor x lsquoThe Chinese slow down in char tsrsquo The Economist July 15 2013 xi lsquoChina rsquos welfare system difficult inflexible and blatantly unfairrsquo The Guardian April 23 2013
httpwwwtheguardiancomglobal-development2013apr23china-welfare-system-inflexible-unfair xii lsquo The Dutch experience with Defined Ambition pensions and the impact on companiesrsquo Aegon Global Pensions March 12 2013
httpwwwaegonglobalpensionscomenHomePublicationsNews-archiveNewsThe-Dutch-experience-with-Defined
Ambition-pensions-and-what-that-may-mean-for-companies-in-the-Netherlands-and-the-UK
shy
The Young Pragmatic and Penniless Generation | 34
Contact information HE ADQUARTER S
Aegon NV
PO Box 85
2501 CB The Hague
Telephone +31 70 344 32 10
w w waegoncom
MEDIA REL ATIONS
Telephone +31 70 344 89 56
Email gcc-iraegoncom
Countr y Index score
Germany 548
China 541
Canada 524
United States 519
The Netherlands 488
United Kingdom 486
Sweden 483
France 475
Hungar y 473
Poland 463
Spain 440
Japan 430
Total 489
Appendix 1 Aegon Retirement Readiness Index (ARRI) - technical note
Aegon Retirement Readiness Index (ARRI)-technical note 2013 Weightings (2012 in brackets) A sample of 12000 pre and post retirees was drawn from 1 Personal responsibilit y 20 (30)
twelve countries Of these 10800 (90) were pre-retirees 2 Level of awareness 30 (35)
and these were chosen for fur ther analysis of their plans 3 Financial capability Understanding 30 (25)
for retirement The Index that was developed forms an 4 Retirement planning 50 (50)
assessment of how well an individual perceives the adequacy 5 Financial preparedness 60 (60)
of his her own finances and financial awareness specifically 6 Income replacement 35 (35)
for addressing his retirement needs
Note that the weights devised to show the relative
The lsquotargetrsquo for the Index impor tance of each question in calculating the Index add to
The question on current savings activity was designated as the 225 These were then re-scaled so that a final scale of 1 to
target question (dependent variable) for predicting the level of 10 was calculated
preparedness for retirement Responses to this question were
then correlated with each of the six key questions (variables) Final scores by country below to understand which were driving the activity These weightings were multiplied by the actual scores for each
This was done because it was not felt to be correct to give respondent for each of the six Index questions and aggregated
each of the six variables described below an equal weight as to obtain a provisional score This was then adjusted to
they appeared to have quite different relationships to the give countr y scores out of 1 to 10 (A score of 1 to 10 had
target question sufficient differentiation to be used as the scale for analysis)
1 Personal responsibilit y for income in retirement
2 Level of awareness of need to plan for retirement
3 F inancial capability Understanding of financial matters
regarding plans for retirement
4 Retirement planning Level of development of plans
5 Financial preparedness for retirement
6 Income replacement Level of projected income replacement
The weighting To estimate the statistical significance of the decline in overall
scores in this yearrsquos Index is theoretically incalculable
Two things have changed from 2012 to 2013
1 C anada and China have joined the sample
2 The new countries have thus influenced the weights of
emphasis placed on the 6 variables used to calculate
the score hence the weights attached to the complex
calculation have changed
However it is noticeable that for countries which were sampled
in both time periods the mean scores for the six individual
variables have almost invariably declined and on average more
than half of them have shown a significant level of decline
In particular the question lsquoDo you think you will achieve this
incomersquo has for all countries shown a significant level of
decline We thus hypothesize that the comparative results
show a significant decline
The Young Pragmatic and Penniless Generation | 36
Net
herl
ands
Net
herl
ands
Net
herl
ands
Ger
man
yG
erm
any
Ger
man
yBase 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
Better off 7 4 23 Sw
eden
Swed
en11 5 7 8 3 11 14 50 5
Swed
en
About the same 19 18 27 23 8 19 18 13 29 29 24 21 U
ntie
dU
ntie
dU
nite
d Worse off 66 74 41 58 79 69 71 76 51 47 21 55
Kin
gdom
Kin
gdom
Kin
gdom
Donrsquot know 9 3 9 9 9 4 4 8 9 10 6 19
Fran
ceFr
ance
Fran
ce
Chart 2 Education of 20 ndash 29 year olds by country Q Please choose from the following list the highest level of educational or professional qualification you have
Spai
nSp
ain
Spa
in
Pol
and
Pol
and
Pol
and
Hun
gary
Hun
gary
Hun
gar y
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
dU
nite
d 100 100 100 100 100 100 100 100 100
Stat
es100 100 100
Stat
esSt
ates
Less than high school graduate 2 44 6 14 1 3 2 7 1 3 Ca
nada
Cana
daC
anad
aHigh school graduate 11 33 53 23 22 22 4 41 14 21 1 2
Some college or trade school 46 2 9 9 9 19 37 14 28 20 4 33 Ch
ina
Chin
aC
hina
College degree University degree 31 15 27 30 41 43 21 33 50 46 9 57
Postgraduate degree or 8 3 3 23 25 11 36 1 8 9 80 6 qualification Ja
pan
Japa
n Ja
pan
Other 2 4 1 1 1 2 0 5 0 6 2
None 0 1 1 0 1 0 0
NET Less than undergrad degree 61 82 70 47 34 46 43 66 42 45 11 37
NET Undergrad degree or higher 39 18 30 53 66 54 57 34 58 55 89 63
Chart 3 Aegon Retirement Readiness Index scores for young employees by country
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
NET Low Index (0-5) 80 64 79 81 85 78 81 73 65 61 61 87
NET Medium Index (6-7) 15 30 18 15 14 21 17 23 25 31 31 12
NET High Index (8-10) 4 6 3 3 1 2 2 4 10 8 7 1
Appendix 2 Country comparisons Chart 1 The majority of young employees believe that they will be worse off in retirement compared to their parents Q Do you think that future generations of retirees will be better off or worse off than those currently in retirement
37 | The Young Pragmatic and Penniless Generation
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsI always make sure that 27 34 27 26 17 14 19 22 35 33 32 20 I am saving for retirement
I only save for retirement G
erm
any
Ger
man
y21 27 20 13 17 21 16 6 17 24 20 24 occasionally from time to time
I am not saving for retirement now 6 11 8 11 5 15 9 4 10 8 9 5 although I have in the past Sw
eden
Swed
en
I am not saving for retirement 35 23 34 46 53 40 49 54 36 33 38 46 though I do intend to U
nite
dU
ntie
dK
ingd
omK
ingd
om I have never saved for retirement and 11 6 10 5 8 10 6 13 3 2 1 6 donrsquot intend to
Fran
ceFr
ance
Chart 5 Younger people are more likely not to be using any means of retirement savings Sp
ain
Spai
nQ Which financial means if any are you currently using to prepare for your retirement
Pol
and
Pol
and
only asked in Germany only asked in Spain
Hun
gary
Hun
gary
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
dSt
ates
Stat
es100 100 100 100 100 100 100 100 100 100 100 100
Defined benefit plan 16 10 25 29 15 3 76 11 20 13 5 Ca
nada
Cana
daDefined contribution plan 28 10 17 19 19 14 10 23 40 7 3
Private pension 8 18 14 10 5 9 4 13 12 40 66 4 Ch
ina
Chin
a Government pension social security 12 43 14 21 8 7 4 18 27 33 71 35
Stocks 5 12 14 7 4 17 7 2 13 10 23 9
Bonds 1 8 5 6 2 16 4 2 8 13 14 3 Ja
pan
Japa
n
Mutual funds 2 14 23 4 2 10 3 4 7 16 9 6
Investment insurances (annuities) 2 3 2 3 2 9 4 5 2 4 6 1
Savings accounts 23 37 38 25 23 6 29 15 36 37 65 36
Investment property 2 10 6 7 9 2 5 2 5 11 18 1
Employee stock purchase 1 1 1 4 1 29 0 4 1 7 1
My home 10 5 8 7 7 8 4 6 6 14 30 1
Reverse mortgage 1 4 2 4
My business 2 1 3 2 2 4 1 1 2 4 12 1
Inheritance 3 11 7 11 7 9 9 8 7 9 6 2
Annuities 1 15 2 2 1 4 3 2 1 2 8
Long-term care insurance 2 1 3 2 9 5 1 6 4 7 1
Life insurance 6 11 8 8 14 3 18 15 19 18 36 17
Unterstuumltzungskasse aus 2 Eigenmitteln finanziert
Unterstuumltzungskasse vom 2 Arbeitgeber finanziert
Chart 4 Younger employees are much more likely to aspire to save for retirement Which of the following best explains your approach to saving for retirement This can include money you contribute to any long-term
investment including pensions stocks and shares investment-linked insurances property etc
Q
The Young Pragmatic and Penniless Generation | 38
Plan de empleo mixto 2 (combinacioacuten de las dos anteriores)
Other 1 6 4 0 1 2 2 3 2 2 3 3
None nothing 8 14 12 23 25 31 6 27 21 17 3 24
Donrsquot know 29 6 17 13 19 8 4 9 7 7 0 9
hart 6 The younger generation has more negative associations of retirement Which if any of the following words do you most associate with retirement
Net
herl
ands
Net
herl
ands
Ger
man
yG
erm
any
Swed
enSw
eden
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
d100 100 100 100 100 100 100 100 100 100 100 100
Kin
gdom
Kin
gdom
Freedom 35 32 36 39 19 26 11 20 35 40 37 33
Opportunity 7 27 25 18 4 8 9 10 17 16 9 16 Fr
ance
Fran
ceLeisure 58 48 36 41 23 24 43 32 50 50 55 6
Excitement 2 5 3 8 2 6 1 2 17 17 4 3 Sp
ain
Spai
nPoverty 11 26 23 11 26 14 37 44 7 5 6 20
Insecurity 34 24 18 16 20 18 35 56 10 9 18 44 P
olan
dP
olan
dLoneliness 4 10 17 16 12 7 11 8 5 9 20 12
Ill health 2 19 7 14 15 9 49 23 6 6 29 11 H
unga
ryH
unga
ryDependent on others 11 11 5 18 14 8 18 19 14 6 11 4
Tired 3 4 8 10 14 10 17 6 7 7 13 19 U
nite
dU
nite
dFar away 38 19 25 21 61 32 2 13 33
Stat
es33 14 22
Stat
es
Boredom 14 16 6 12 16 12 15 8 12 12 16 17 Ca
nada
Cana
daEnjoyment 21 16 17 23 14 29 5 3 37 37 35 15
None of the above 0 1 1 2 0 2 1 1 2 2 1 2
Donrsquot know 2 2 3 3 2 2 1 2 0 Ch
ina
6 Ch
ina
hart 7 Many young employees think they are not on course to achieve target retirement income Ja
pan
Japa
n Do you think you will achieve this income [your estimated income needed in retirement]
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
I donrsquot know if I am on course to 56 37 57 59 50 39 49 48 48 41 22 68 achieve my retirement income
No I am on course to achieve around one-quarter (25) of my 10 14 9 13 15 14 14 13 10 10 10 7 retirement income
No I am on course to achieve around 12 20 14 11 19 19 18 15 12 11 23 12 half of my retirement income
No I am on course to achieve around three-quarters (75) of my 8 14 7 4 8 15 9 8 6 11 20 5 retirement income
Yes I am on course to achieve my 15 15 13 14 8 13 11 17 25 27 25 8 retirement income
CQ
CQ
39 | The Young Pragmatic and Penniless Generation
Chart 8 Young people in most countries expect to retire before 65 Q At what age do you expect to retire from all paid employment
Net
herl
ands
Ger
man
y
Swed
en
Uni
ted
Kin
gdom
Fran
ce
Spai
n
Pol
and
Hun
gary
Uni
ted
Stat
es
Cana
da
Chin
a
Japa
n
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
40 or under 0 1 1 0 0 1 3 1 5 12
41-50 1 2 3 5 2 2 6 3 9 4 37 9
51-59 4 4 4 6 2 4 11 5 7 10 30 1
60 5 11 8 12 10 13 19 12 12 16 21 27
61-64 2 11 10 2 20 7 4 13 5 3 1 2
65 17 22 44 31 34 32 16 26 26 32 3 25
66-69 42 32 15 9 12 29 20 13 9 9 0 1
70 19 11 10 18 10 5 10 9 13 12 0 6
71+ 5 5 5 9 4 5 5 3 7 5 1 4
Never 2 1 1 2 2 2 6 4 1 0 0
Donrsquot know 2 3 2 5 3 2 8 9 5 5 1 13
Mean 67 65 65 65 64 65 63 64 63 64 53 59
Median 67 65 65 65 65 65 65 65 65 65 55 60
Chart 9 Younger employees feel they donrsquot have money to invest for retirement Q What is the single biggest obstacle to you saving for retirement right now
Net
herl
ands
Ger
man
y
Swed
en
Uni
ted
Kin
gdom
Fran
ce
Spai
n
Pol
and
Hun
gary
Uni
ted
Stat
es
Cana
da
Chin
a
Japa
n
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
The uncertain economic environment 19 8 13 9 13 19 11 14 12 9 29 27
Lack of money to invest 28 41 33 43 47 34 48 55 47 50 6 19
Fear of poor investment returns over the coming years 2 5 10 7 5 6 8 2 6 8 14 6
Complexity of investment products 4 4 4 3 5 3 5 2 12 5
I donrsquot know how to go about investing for the long-term 2 3 10 8 5 5 3 3 6 8 7 9
The fees charged by financial services companies 2 4 4 2 4 3 4 2 3 5 2 5
I canrsquot afford to take financial advice 3 3 6 8 2 4 3 5 3 2 3 2
I donrsquot trust the financial services industry 12 11 8 6 5 10 6 2 2 3 5 4
I donrsquot see the need to save for the long-term 6 1 2 2 3 3 3 1 2 1 4 3
Concerns about unstable currencies currency fluctuations 2 5 1 3 3 3 4 3 4 5 15 2
Other (PLEASE STATE) 3 3 1 1 3 2 4 6 2 2 1
Donrsquot know 17 12 11 7 8 6 3 6 8 6 3 17
The Young Pragmatic and Penniless Generation | 40
Chart 10 More money would incentivize young employees to save for retirement Q Which if any of the following would encourage you to save for retirement
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsMore generous tax breaks on long-term savings and pensions 20 44 30 32 27 23 42 42 33 43 40 32 products
Ger
man
yG
erm
any
Access to financial education so that I am more aware of what 24 6 14 21 16 22 21 12 23 24 43 25 I need to do for myself
Swed
enSw
eden
Access to professional financial advice so that I have personalized
Uni
ted
20 24 23 23 15 21 25 9 22 23 44 13 U
nite
drecommendations on what steps
Kin
gdom
Kin
gdom
I need to take
Simpler investment products that 12 33 19 28 20 Fr
ance
18 27 16 32 28 36 10 Fr
ance
I can understand with less jargon
Better and more frequent information about my retirement 16 28 20 27 27 23
Spai
n20 18 25 31 45 22
Spai
nsavings
Better legal protection in case I am 12 18 13 18 10 24 18 13 13 19 21 6 P
olan
dP
olan
dsold the wrong product
A pay rise 46 54 44 64 55 50 70 72 67 64 53 37
A better retirement plan pension H
unga
ryH
unga
ry27 32 25 33 29 26 42 35 39 44 33 32 match from my employer
Other 4 2 1 1 2 2 3 3 2 U
nite
d3 0
Uni
ted
Stat
esSt
ates
Donrsquot know 17 9 16 10 10 12 3 8 8 5 3 17
Not applicable - I already have 3 3 4 2 2 1 1 1 2 2 3 sufficient savings Ca
nada
Cana
da
Chin
aCh
ina
Chart 11 A majority of younger employees do not have a written plan for retirement Q Which of the following best describes your retirement planning strategy
Japa
n Ja
pan
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
I have a written plan 7 18 10 9 6 8 6 5 13 10 8 4
I have a plan but it is not written 24 47 37 25 23 31 29 31 37 44 55 24
down
I do not have a plan 61 32 51 61 62 55 62 58 45 42 34 61
Donrsquot know 7 3 3 5 8 6 3 6 4 4 3 12
41 | The Young Pragmatic and Penniless Generation
Chart 12 For young employees friends and family are the leading source of retirement savings information Q And which of these sources (of information) is most important to you
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
Bank adviser 6 11 19 5 25 5 7 4 3 17 10 2 N
ethe
rlan
dsN
ethe
rlan
dsProfessional financial adviser 12 22 10 12 10 19 19 22 21 25 19 10
Insurance agent spokesperson 3 10 2 3 1 3 6 2 3 0 3 2 G
erm
any
Ger
man
yInsurance company website 3 1 3 2 4 4 2 2 1 3 1
Personal finance websites online 8 5 7 8 5 4 10 8 12 6 10 8 retirement planning tools Sw
eden
Swed
enPersonal finance media 2 2 2 2 2 6 3 1 2 1 6 2
Government website 7 1 3 6 U
nite
d5 2 3 3 2 3 7 1
Uni
ted
Kin
gdom
Kin
gdom
Bank website 2 3 3 2 1 0 3 2 1 6 3 3
My employer 12 8 4 9 4 7 5 12 8 5 4 1 Fr
ance
Fran
ceAccountant 2 6 4 4 1 3 1 3 5 5 1 3
Lawyer 2 3 1 2 2 8 4 2 1 2 2 0 Sp
ain
Spai
nFriends and family 21 22 30 28 24 26 18 24 26 20 25 24
None of these P
olan
dP
olan
dNot applicable 21 7 16 18 19 13 17 15 14 9 5 41
Hun
gary
Hun
gary
Chart 13 Most young workers feel their employer should provide some kind of pension Q In the future what if anything should employers do to help people plan for retirement
Uni
ted
Uni
ted
Stat
esSt
ates
Cana
daCa
nada
Chin
aCh
ina
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 Ja
pan
Japa
n Employers should be required to 24 43 20 40 21 26 20 28 37 34 20 30 contribute to workersrsquo pensions
Employers should be required to make a pension available but not to 12 13 7 17 20 15 15 4 11 14 22 5 contribute into it
Employers should not be required to provide pensions but should 15 9 12 8 9 8 11 6 11 9 9 11 provide information on how to plan for retirement
Employers should provide a range of flexible benefits and 13 18 18 16 15 27 25 28 21 22 45 12 allow individuals to choose which benefits they actually want
Nothing ndash it should be left to individual employees to take care 2 2 5 1 4 3 3 5 6 5 1 9 of themselves
Nothing ndash it should be left to the government to take care of its 2 5 5 2 5 8 15 14 1 4 0 4 citizens
Donrsquot know 30 10 32 17 27 12 12 15 13 13 3 29
The Young Pragmatic and Penniless Generation | 42
Chart 14 Workplace pensions are relatively low down in young workersrsquo priorities when choosing a job Q How important to you would the following workplace benefits be if you were choosing your next job
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsBasic salary 86 93 88 91 88 92 90 94 90 93 96 94
Holiday entitlement 87 94 89 91 92 94 91 94 93 94 96 91 G
erm
any
Ger
man
yOvertime and bonus pay 86 93 87 88 89 90 89 94 90 91 97 90
Location of workplace 88 91 86 92 89 90 89 92 93 93 92 86 Sw
eden
Swed
enMedical health insurance 73 92 84 65 86 87 88 87 93 94 98 83
Opportunities for career progression 86 91 81 90 90 94 91 94 92 91 96 81 U
nite
dU
nite
dAccess to a workplace retirement 85 85 81 82
Kin
gdom
78 84 80 78 84 86 93 74 K
ingd
omplan with employer contributions
Access to good training provision 85 87 85 88 86 91 85 93 86 90 95 74 Fr
ance
Fran
ceFlexible working hours 79 87 58 86 81 89 81 87 91 91 92 57
Life insurance 72 75 79 69 80 82 Sp
ain
84 80 81 88 93 74 Sp
ain
(death in service benefits)
Phased retirement or other employer programs providing for 74 54 75 71 72 81 76 74 76 81 91 65
Pol
and
Pol
and
a transition into retirement
Ability to work past the normal 68 57 64 65 64 74 72 65 74 76 80 70 retirement age H
unga
ryH
unga
ry
Access to a workplace retirement 62 74 61 68 59 77 61 47 68 74 89 65 plan without employer contributions U
nite
dU
nite
dSt
ates
Stat
esEmployee share plans 50 72 54 65 59 73 61 51 64 73 91 55
Access to creche help with the 67 75 64 56 69 79 75 83 58 69 89 68 cost of childcare Ca
nada
Cana
da
Opportunities for foreign travel 53 54 60 55 50 71 58 66 57 61 79 37
Company car 51 46 45 47 49 63 51 49 36 49 69 Ch
ina
39 Ch
ina
Japa
n Ja
pan
Chart 15 Young workers think the state pension will need to be reformed Q With the cost of government pensions becoming a greater concern as people live longer which if any of the following do you think
the government should undertake
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
The government should reduce the overall cost of state pension 15 33 16 15 16 20 28 22 21 26 30 16 provision by reducing the value of individual pension plans
The government should increase overall funding available for the 12 21 30 22 14 34 19 26 21 18 29 10 state pension through raising taxes
43 | The Young Pragmatic and Penniless Generation
he government should take a alanced approach with some 27 26 12 30 28 23 24 16 34 31 38 41 eductions in individual payments nd some increases in tax
he government should not do nything State pension provision 7 2 12 5 3 4 3 3 5 4 0 5 ill remain perfectly affordable in he future
onrsquot know 38 19 29 29 39 20 26 34 19 21 4 28
Net
herl
ands
art 16 Products which protect against investment risk are the most important to young workers ( interested) Thinking about the types of financial products you could purchase to help provide you with security in retirement on a scale of 1 to 5
how interested are you in the following options G
erm
any
Swed
en
Uni
ted
Kin
gdom
ase 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 Fr
ance
100 100 100 100 100 100 100 100 100 100 100 100
product providing a guaranteed etirement income stream or 75 81 73 76 74 83 78 76 87 85 94 69
Spai
nifetime income in retirement
product which protects my 74 79 73 76 72 82 77 74 84 86 94 65 etirement income against inflation P
olan
d
product which guarantees that I 72 82 73 78 75 81 76 73 86 86 90 67 onrsquot lose my initial investment H
unga
ry product which helps meet the ost of long-term care if I become 74 79 74 77 70 79 76 71 86 85 84 66
Uni
ted
nable to look after myself St
ates
product which protects my capital 71 81 71 76 68 76 77 73 84 83 93 65 rom poor investment returns Ca
nada
product which generates a etirement income and allows 69 78 71 75 68 81 77 72 84 86 94 70 e to take a lump sum from the
Chin
anvestment should I need to
product where the annual 66 78 68 75 72 79 77 70 85 86 87 64 anagement charges are kept low Ja
pan
product which enables me to eep some control over how my 71 73 70 75 72 80 75 69 88 85 91 63 avings are invested during my etirement
product which manages the sset allocation so that I am never 68 70 67 73 66 76 71 67 80 83 95 60 xposed to a level of risk Irsquom not omfortable with
product which continues to rovide a retirement income to my 74 78 71 75 73 81 79 73 86 82 94 60 pouse in the event that I die first
product which protects my family gainst having to pay estate taxes 73 76 71 74 75 81 75 69 82 82 89 56 hen I die
product which locks in investment 72 71 63 73 64 71 59 56 81 84 89 61 eturns during the good years
Tbra
Tawt
D
ChQ
B
Arl
Ar
Ad
Acu
Af
Armi
Am
Aksr
Aaec
Aps
Aaw
Ar
The Young Pragmatic and Penniless Generation | 44
The government should reduce the overall cost of state pension provision by
reducing the value of Donrsquot know individual pension plans
25 22
4 The government should not do anything State pension provision will
remain perfectly affordable in the future
28
21 The government should increase overall funding
available for the state pension through
raising taxes
The government should take a balanced approach with some reductions in individual payments and
some increases in tax
Chart 18 Young workers think that the government retirement system will need to be reformed Q With the cost of government retirement benefits becoming a greater concern as people live longer which
if any of the following do you think the government should undertake
Base 20-29 year olds
The younger generation believes that the government cannot What do young employees look for in a retirement product continue to provide as it does now ndash just 4 think government The sur vey findings show that young employees have
benefits will remain affordable to society However there is no reser vations about employer and government retirement
consensus on what governments should do to reform retirement benefits So what then do they want from a private savings
plan systems Over a fifth (22) think retirement entitlements product The savings product feature most valued by younger
should be cut just over a fifth (21) think governments should workers is protection against investment risk (Char t 19)
raise taxes and more than a quarter (28) think a mixture of This may be in the form of no loss of initial investment a
the two is the best solution Another quarter admits that they guaranteed income stream or protection against inflation
donrsquot know what should be done This is reasonable ndash the initial investment of those farthest
from retirement is most at risk However less consideration
is given to savings grow th through investment returns This
suggests that there is an oppor tunity to educate young
workers about the trade-off between returns and risk
management and what they stand to gain
25 | The Young Pragmatic and Penniless Generation
Chart 19 Products which protect against investment risk are the most important to young workers ( interested) Q Thinking about the types of financial products you could purchase to help provide you with security in retirement on a scale of 1 to 5
how interested are you in the following options
Base 20-29 year olds
A product providing a guaranteed retirement income stream or lifetime income in retirement 82
A product which protects my retirement income against inflation 81
A product which guarantees that I donrsquot lose my initial investment 81
A product which helps meet the cost of long-term care if I become unable to look after myself 80
A product which protects my capital from poor investment returns 79
A product which generates a retirement income and allows me to take a lump sum from the investment should I need to 79
A product where the annual management charges are kept low 78
A product which enables me to keep some control over how my savings are invested during my retirement 77
A product which manages the asset allocation so that I am never exposed to a level of risk Irsquom not comfortable with 76
A product which continues to provide a retirement income to my spouse in the event that I die first 75
A product which protects my family against having to pay estate taxes when I die 72
A product which locks in investment returns during the good years 70
The lsquodefined ambitionrsquo retirement system in This removes some of the disadvantages of leaving
the Netherlands a sustainable retirement solution retirement liabilities exclusively up to employers
for young workers (defined benefit) or employees (defined contribution)
In the Netherlands as elsewhere young workers are faced In the Netherlands this is likely to involve legislation which
with an increasing retirement age decreasing government lets retirement funds automatically adjust pay-outs and
suppor t for retirement and declining traditional defined retirement age as life expectancy changes xii
benefit employer retirement plans Reforms proposed
by the Dutch may show a way for ward for all mature and This model has garnered interest elsewhere In the
aging economies United Kingdom Pensions Minister Steve Webb expressed
interest on a more limited scale with a government
rsquoDefined ambitionrsquo proposes that risks are not taken on fully guarantee for a minimum rate of return for defined
by either employer or employee but are shared contribution retirement plans
The Young Pragmatic and Penniless Generation | 26
Recommendations Enabling young workers to save The studyrsquos findings reveal that the majority of young workers (66) are either saving consistently or aspire to start saving but face challenges including debt low pay and funding for significant life events and generational changes to the economic landscape and government and employer support If young people are to achieve a prosperous retirement their willingness to save should be met with better opportunities to save Here is what can be done by employers governments and young people themselves to address retirement planning concerns for younger adults
27 | The Young Pragmatic and Penniless Generation
Individuals Employers and governments
Determine how much income you need in retirement Auto-enroll employees into a workplace retirement plan Young people accept the need to save for retirement but donrsquot If an auto-enrollment workplace retirement plan is feasible
know how to act on that need They can become more retirement this can play a major role in getting young workers saving early
savvy simply by talking to friends and family (as do 24 of and regularly Combined with auto-escalation (the automatic
our respondents already) or employers going online to use annual increase in retirement plan contributions) and matching
retirement calculators or reading the personal finance media contributions it can lead to greater retirement readiness
Seek out a financial advisor Provide more flexible savings products through the workplace Young people are faced with life events that make it easy to Not all savings journeys start with a retirement plan particularly
feel overwhelmed by financial priorities in addition to retirement for young people who may think of retirement as lsquotoo far awayrsquo
planning Soliciting advice from a finance professional early in Employers can kick-start the savings habit in younger workers
life (17 of young employees have done so already) helps with by providing flexible easy to access and easy to understand
planning and priorities and making sense of long-term finances savings plans as a more attractive starter option
Start saving now and save consistently Make company retirement plans more portable As with all employees young people will strengthen their Young people move jobs much more often than previous
retirement readiness simply by saving regularly Today only 25 generations of employees so savings like DC retirement plans
of young people always save yet even small regular amounts need to follow employees when they change jobs
will improve retirement readiness over time
Make tax incentives more effective Ask your employer about workplace retirement savings plans All countries encourage long-term savings through tax relief but
and other retirement benefits young people often arenrsquot aware of this or donrsquot understand it
While one third (33) of young people believe that a workplace A more targeted system of tax relief could help provide clearer
retirement savings plan provides a major opportunity to start and simpler signals to younger people about the financial
saving employers often experience difficulties in engaging benefits of long-term saving
younger employees in discussions about retirement planning
The workplace is an important channel for achieving retirement Make better financial education central to the workplace readiness so be sure to max out on any employer contributions retirement offer
Young people who aspire to save may be prevented from
doing so by setting the wrong financial priorities Workplace
retirement education ndash alongside professional advice ndash can help
guide young people toward the right long-term priorities at an
earlier age in life
The Young Pragmatic and Penniless Generation | 28
29 | The Young Pragmatic and Penniless Generation
Glossary
Aegon Retirement Readiness Index (ARRI) c areer average retirement plan The ARRI assesses the relative levels of retirement A type of defined benefit plan that is based on an
preparedness of employees across different countries on a employeersquos average retirement earnings over the duration
scale from 1 to 10 The Index is based on three questions of plan membership Same as average salary plan
covering attitudes and three questions covering behaviors
defined ambition (DA) plan average salary plan A type of retirement plan in which retirement plan risks
A type of defined benefit plan that is based on an are shared between the employer and the employee
employeersquos average retirement earnings over the duration It offers greater certainty to savers around the final value
of plan membership Same as career average plan of their retirement assets than in DC plans and less
cost volatility for employers than with DB plans In the
a nnuity Netherlands Defined Ambition (DA) retirement plans are
A form of contract sold by life insurance companies that being introduced in order to help relieve the pressure on
guarantees a fixed or variable payment to the annuitant employers while still trying to provide employees with a
at some future time usually retirement All capital in the more secure retirement plan The United Kingdom too is
annuity grows tax-deferred looking at DA retirement plans as a solution
auto enrollment defined benefit (DB) plan An employer-sponsored retirement plan in which the An employer-sponsored retirement plan where the amount
employer is able to enroll an employee without that of future benefits an employee will receive from the plan is
employeersquos express authorization The employer determines defined typically by a formula based on salary history and
what percentage of the employeersquos salary or wages is years of service The amount of contributions the employer
contributed to the plan The employee is able to change is required to make will depend on the investment returns
this percentage and can opt out of enrollment in the plan experienced by the plan and the benefits promised
Contrast defined contribution plan
a uto-escalation A feature of a plan which automatically increases the defined contribution (DC) plan percentage of (retirement) funds saved from salary An employer-sponsored retirement plan such as a 401(k)
This feature generally uses a default or standard plan or a 403(b) plan in the United States in which
contribution escalation rate contributions are made to individual participant accounts
Depending on the type of DC plan contributions may be
B aby Boomers made by the employee the employer or both
A term used to refer to people generally born between
the end of World War II in 1945 and the mid 1960s The employeersquos benefits at retirement or termination of
Other generations Silent Generation - the generation born employment are based on the employee and employer
between 1925 and 1945 Generation X - the generation contributions and earnings and losses on those
born between 1965 and 1979 Millennials or Generation contributions See also 401(k) and 403(b) plan
Y - the generation born between 1980 and 2000 and often Contrast defined benefit plan
classified as the children of Baby Boomers
The Young Pragmatic and Penniless Generation | 30
401(k) plan An employer sponsored retirement plan that enables
employees to make tax-deferred contributions from their
salaries to the plan
403(b) plan An employer-sponsored defined contribution plan that
enables employees of universities public schools and
non-profit organizations to make tax-deferred contributions
from their salaries to the plan
final salary plan A type of defined benefit plan in which retirement
benefits are based on final retirement salary in the years
immediately before retirement benefits are received
Millennials A term used to refer to the people born from about 1980
to 2000 brought up using digital technology They are
often classified as the children of Baby Boomers
r etirement (or pension) plan Provides replacement for salary when a person is no
longer working due to retirement In the case of a defined
benefit retirement plan the employer or union contributes
to the plan which pays a predetermined benefit for the
rest of the employeersquos life based on length of service and
salary Payments may be made either directly or through
an annuity Retirement plan payments are taxable income
to recipients in the year received The employer or union
has fiduciary responsibility to invest the retirement plan
funds in stocks bonds real estate and other assets earn
a satisfactory rate of return and make payments to retired
workers Retirement plan funds holding trillions of dollars
are one of the largest investment forces in the stock
bond and real estate markets If the employer defaults in
the United States retirement plan payments are usually
guaranteed by the Pension Benefit Guaranty Corporation
(PBGC)
variable annuities (VA) An insurance contract in which the insurance company
guarantees a minimum payment at the end of the
accumulation period The payments may vary depending
on the financial performance of the managed portfolio
31 | The Young Pragmatic and Penniless Generation
About Aegon Transamerica Center for Retirement Studiesreg and Cicero Consulting
Aegon Transamerica Center Aegon is an international life insurance pensions and asset reg management company with businesses in over 20 markets for Retirement Studies in the Americas Europe and Asia Aegon companies employ The Transamerica Center for Retirement Studiesreg (TCRS) is
around 24000 people and serve millions of customers a division of the Transamerica Institute a nonprofit private
worldwide foundation TCRS is dedicated to educating the public on
wwwaegoncom emerging trends surrounding retirement security in the
United States TCRSrsquo research emphasizes employer-sponsored
In 2010 Aegon became a founding member of the Global retirement plans issues faced by small to mid-sized companies
Coalition on Aging which seeks to raise awareness of aging and their employees and the implications of legislative and
issues among policymakers and the general public A major aim regulatory changes Transamerica Institute is funded by
of the coalition is to transform the way we think and speak contributions from Transamerica Life Insurance Company and
about aging replacing the familiar rhetoric of lsquoproblemsrsquo with its affiliates and may receive funds from unaffiliated third-
a more positive discussion of lsquopossibilitiesrsquo and lsquoopportunitiesrsquo parties For more information about TCRS please refer to
wwwglobalcoalitiononagingcom wwwtransamericacenterorg
Cicero Consulting A leading consultancy firm serving the banking insurance and
asset management sector Cicero specializes in public policy
and communications consulting as well as global thought
leadership and independent market research Cicero was
established in 2001 and now operates from offices in London
Brussels Washington and Singapore As a market leader in
pensions and retirement research Cicero designed
and analyzed the research and contributed to the report
wwwcicero-groupcom
The Young Pragmatic and Penniless Generation | 32
Marta acebo Mark Green Patricia Plas
Paula alvarez douGlas henck scott roane
Frits bart wendel hoFMan thurstan robinson
Grace basile
lynette belFry
andrew berwick
Frans van der horst
tatsuo kai
herMan kaPPelle
Patti rowey
sarah russell
Joost van schaGen
robin boon Gaacutebor kePecs dick schiethart
bert-JaaP brons Marco keiM erik schouten
douG brooks
libby buet
kent callahan
JaiMe kirkPatrick
bas knol
roGer koch
anGela seyMour Jackson
kate sMith
renske stoker
Jeanne de cervens
dana chen
Peter kunkel
alexander kuiPers
eyleen sun
MartiJn tans
arkadiusz chMurzynski
heidi cho
brian lewis
Mike linder
GreG tucker
Mark twiGG
siMon clow siMon luke catherine wanG
robert colliGnon Jason Ma Marc van weede
catherine collinson GrzeGorz Mathea tiM willaert
wendy daniels
Michel denizot
edit drevenka
Paul Middleton
takaoh MiyaGawa
david Moulton
daniel wriGht
alex wynaendts
MacieJ zaPala
Jan driessen
kelly Fu
adrian Grace
Mark Mullin
Marcelle noltenius
stiG nybo
Peacuteter zatykoacute
vicky zeldin
Disclaimer This repor t contains general information only and does
not constitute a solicitation or offer No rights can be
derived from this repor t Aegon its par tners and any of
their affiliates or employees do not guarantee warrant
or represent the accuracy or completeness of the
information contained in the repor t
Acknowledgements
33 | The Young Pragmatic and Penniless Generation
References and notes i For a comparison of different retirement systems see lsquoPensions at a Glance 2011rsquo OECD 2011 ii As the survey was carried out online the survey results in China are based toward people living in urban areas iii ldquoPensions Marketsrdquo TheCityUK March 2013 p9 iv Global Employment Trends for Youth 2013 A generation at risk International Labour Organisation 2013 p2 v Eurostat July 2013 vi OECD Employment and Labour Markets Key Tables from OECD No 2 2012 vii The Federal Reserve Bank of New York 2012 Quarterly Report on Household Debt March 29 2013 viii World Bank ix lsquoWorld-class povertyrsquo The Economist February 27 2013
httpwwweconomistcomblogsanalects201302chinas-poor x lsquoThe Chinese slow down in char tsrsquo The Economist July 15 2013 xi lsquoChina rsquos welfare system difficult inflexible and blatantly unfairrsquo The Guardian April 23 2013
httpwwwtheguardiancomglobal-development2013apr23china-welfare-system-inflexible-unfair xii lsquo The Dutch experience with Defined Ambition pensions and the impact on companiesrsquo Aegon Global Pensions March 12 2013
httpwwwaegonglobalpensionscomenHomePublicationsNews-archiveNewsThe-Dutch-experience-with-Defined
Ambition-pensions-and-what-that-may-mean-for-companies-in-the-Netherlands-and-the-UK
shy
The Young Pragmatic and Penniless Generation | 34
Contact information HE ADQUARTER S
Aegon NV
PO Box 85
2501 CB The Hague
Telephone +31 70 344 32 10
w w waegoncom
MEDIA REL ATIONS
Telephone +31 70 344 89 56
Email gcc-iraegoncom
Countr y Index score
Germany 548
China 541
Canada 524
United States 519
The Netherlands 488
United Kingdom 486
Sweden 483
France 475
Hungar y 473
Poland 463
Spain 440
Japan 430
Total 489
Appendix 1 Aegon Retirement Readiness Index (ARRI) - technical note
Aegon Retirement Readiness Index (ARRI)-technical note 2013 Weightings (2012 in brackets) A sample of 12000 pre and post retirees was drawn from 1 Personal responsibilit y 20 (30)
twelve countries Of these 10800 (90) were pre-retirees 2 Level of awareness 30 (35)
and these were chosen for fur ther analysis of their plans 3 Financial capability Understanding 30 (25)
for retirement The Index that was developed forms an 4 Retirement planning 50 (50)
assessment of how well an individual perceives the adequacy 5 Financial preparedness 60 (60)
of his her own finances and financial awareness specifically 6 Income replacement 35 (35)
for addressing his retirement needs
Note that the weights devised to show the relative
The lsquotargetrsquo for the Index impor tance of each question in calculating the Index add to
The question on current savings activity was designated as the 225 These were then re-scaled so that a final scale of 1 to
target question (dependent variable) for predicting the level of 10 was calculated
preparedness for retirement Responses to this question were
then correlated with each of the six key questions (variables) Final scores by country below to understand which were driving the activity These weightings were multiplied by the actual scores for each
This was done because it was not felt to be correct to give respondent for each of the six Index questions and aggregated
each of the six variables described below an equal weight as to obtain a provisional score This was then adjusted to
they appeared to have quite different relationships to the give countr y scores out of 1 to 10 (A score of 1 to 10 had
target question sufficient differentiation to be used as the scale for analysis)
1 Personal responsibilit y for income in retirement
2 Level of awareness of need to plan for retirement
3 F inancial capability Understanding of financial matters
regarding plans for retirement
4 Retirement planning Level of development of plans
5 Financial preparedness for retirement
6 Income replacement Level of projected income replacement
The weighting To estimate the statistical significance of the decline in overall
scores in this yearrsquos Index is theoretically incalculable
Two things have changed from 2012 to 2013
1 C anada and China have joined the sample
2 The new countries have thus influenced the weights of
emphasis placed on the 6 variables used to calculate
the score hence the weights attached to the complex
calculation have changed
However it is noticeable that for countries which were sampled
in both time periods the mean scores for the six individual
variables have almost invariably declined and on average more
than half of them have shown a significant level of decline
In particular the question lsquoDo you think you will achieve this
incomersquo has for all countries shown a significant level of
decline We thus hypothesize that the comparative results
show a significant decline
The Young Pragmatic and Penniless Generation | 36
Net
herl
ands
Net
herl
ands
Net
herl
ands
Ger
man
yG
erm
any
Ger
man
yBase 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
Better off 7 4 23 Sw
eden
Swed
en11 5 7 8 3 11 14 50 5
Swed
en
About the same 19 18 27 23 8 19 18 13 29 29 24 21 U
ntie
dU
ntie
dU
nite
d Worse off 66 74 41 58 79 69 71 76 51 47 21 55
Kin
gdom
Kin
gdom
Kin
gdom
Donrsquot know 9 3 9 9 9 4 4 8 9 10 6 19
Fran
ceFr
ance
Fran
ce
Chart 2 Education of 20 ndash 29 year olds by country Q Please choose from the following list the highest level of educational or professional qualification you have
Spai
nSp
ain
Spa
in
Pol
and
Pol
and
Pol
and
Hun
gary
Hun
gary
Hun
gar y
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
dU
nite
d 100 100 100 100 100 100 100 100 100
Stat
es100 100 100
Stat
esSt
ates
Less than high school graduate 2 44 6 14 1 3 2 7 1 3 Ca
nada
Cana
daC
anad
aHigh school graduate 11 33 53 23 22 22 4 41 14 21 1 2
Some college or trade school 46 2 9 9 9 19 37 14 28 20 4 33 Ch
ina
Chin
aC
hina
College degree University degree 31 15 27 30 41 43 21 33 50 46 9 57
Postgraduate degree or 8 3 3 23 25 11 36 1 8 9 80 6 qualification Ja
pan
Japa
n Ja
pan
Other 2 4 1 1 1 2 0 5 0 6 2
None 0 1 1 0 1 0 0
NET Less than undergrad degree 61 82 70 47 34 46 43 66 42 45 11 37
NET Undergrad degree or higher 39 18 30 53 66 54 57 34 58 55 89 63
Chart 3 Aegon Retirement Readiness Index scores for young employees by country
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
NET Low Index (0-5) 80 64 79 81 85 78 81 73 65 61 61 87
NET Medium Index (6-7) 15 30 18 15 14 21 17 23 25 31 31 12
NET High Index (8-10) 4 6 3 3 1 2 2 4 10 8 7 1
Appendix 2 Country comparisons Chart 1 The majority of young employees believe that they will be worse off in retirement compared to their parents Q Do you think that future generations of retirees will be better off or worse off than those currently in retirement
37 | The Young Pragmatic and Penniless Generation
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsI always make sure that 27 34 27 26 17 14 19 22 35 33 32 20 I am saving for retirement
I only save for retirement G
erm
any
Ger
man
y21 27 20 13 17 21 16 6 17 24 20 24 occasionally from time to time
I am not saving for retirement now 6 11 8 11 5 15 9 4 10 8 9 5 although I have in the past Sw
eden
Swed
en
I am not saving for retirement 35 23 34 46 53 40 49 54 36 33 38 46 though I do intend to U
nite
dU
ntie
dK
ingd
omK
ingd
om I have never saved for retirement and 11 6 10 5 8 10 6 13 3 2 1 6 donrsquot intend to
Fran
ceFr
ance
Chart 5 Younger people are more likely not to be using any means of retirement savings Sp
ain
Spai
nQ Which financial means if any are you currently using to prepare for your retirement
Pol
and
Pol
and
only asked in Germany only asked in Spain
Hun
gary
Hun
gary
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
dSt
ates
Stat
es100 100 100 100 100 100 100 100 100 100 100 100
Defined benefit plan 16 10 25 29 15 3 76 11 20 13 5 Ca
nada
Cana
daDefined contribution plan 28 10 17 19 19 14 10 23 40 7 3
Private pension 8 18 14 10 5 9 4 13 12 40 66 4 Ch
ina
Chin
a Government pension social security 12 43 14 21 8 7 4 18 27 33 71 35
Stocks 5 12 14 7 4 17 7 2 13 10 23 9
Bonds 1 8 5 6 2 16 4 2 8 13 14 3 Ja
pan
Japa
n
Mutual funds 2 14 23 4 2 10 3 4 7 16 9 6
Investment insurances (annuities) 2 3 2 3 2 9 4 5 2 4 6 1
Savings accounts 23 37 38 25 23 6 29 15 36 37 65 36
Investment property 2 10 6 7 9 2 5 2 5 11 18 1
Employee stock purchase 1 1 1 4 1 29 0 4 1 7 1
My home 10 5 8 7 7 8 4 6 6 14 30 1
Reverse mortgage 1 4 2 4
My business 2 1 3 2 2 4 1 1 2 4 12 1
Inheritance 3 11 7 11 7 9 9 8 7 9 6 2
Annuities 1 15 2 2 1 4 3 2 1 2 8
Long-term care insurance 2 1 3 2 9 5 1 6 4 7 1
Life insurance 6 11 8 8 14 3 18 15 19 18 36 17
Unterstuumltzungskasse aus 2 Eigenmitteln finanziert
Unterstuumltzungskasse vom 2 Arbeitgeber finanziert
Chart 4 Younger employees are much more likely to aspire to save for retirement Which of the following best explains your approach to saving for retirement This can include money you contribute to any long-term
investment including pensions stocks and shares investment-linked insurances property etc
Q
The Young Pragmatic and Penniless Generation | 38
Plan de empleo mixto 2 (combinacioacuten de las dos anteriores)
Other 1 6 4 0 1 2 2 3 2 2 3 3
None nothing 8 14 12 23 25 31 6 27 21 17 3 24
Donrsquot know 29 6 17 13 19 8 4 9 7 7 0 9
hart 6 The younger generation has more negative associations of retirement Which if any of the following words do you most associate with retirement
Net
herl
ands
Net
herl
ands
Ger
man
yG
erm
any
Swed
enSw
eden
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
d100 100 100 100 100 100 100 100 100 100 100 100
Kin
gdom
Kin
gdom
Freedom 35 32 36 39 19 26 11 20 35 40 37 33
Opportunity 7 27 25 18 4 8 9 10 17 16 9 16 Fr
ance
Fran
ceLeisure 58 48 36 41 23 24 43 32 50 50 55 6
Excitement 2 5 3 8 2 6 1 2 17 17 4 3 Sp
ain
Spai
nPoverty 11 26 23 11 26 14 37 44 7 5 6 20
Insecurity 34 24 18 16 20 18 35 56 10 9 18 44 P
olan
dP
olan
dLoneliness 4 10 17 16 12 7 11 8 5 9 20 12
Ill health 2 19 7 14 15 9 49 23 6 6 29 11 H
unga
ryH
unga
ryDependent on others 11 11 5 18 14 8 18 19 14 6 11 4
Tired 3 4 8 10 14 10 17 6 7 7 13 19 U
nite
dU
nite
dFar away 38 19 25 21 61 32 2 13 33
Stat
es33 14 22
Stat
es
Boredom 14 16 6 12 16 12 15 8 12 12 16 17 Ca
nada
Cana
daEnjoyment 21 16 17 23 14 29 5 3 37 37 35 15
None of the above 0 1 1 2 0 2 1 1 2 2 1 2
Donrsquot know 2 2 3 3 2 2 1 2 0 Ch
ina
6 Ch
ina
hart 7 Many young employees think they are not on course to achieve target retirement income Ja
pan
Japa
n Do you think you will achieve this income [your estimated income needed in retirement]
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
I donrsquot know if I am on course to 56 37 57 59 50 39 49 48 48 41 22 68 achieve my retirement income
No I am on course to achieve around one-quarter (25) of my 10 14 9 13 15 14 14 13 10 10 10 7 retirement income
No I am on course to achieve around 12 20 14 11 19 19 18 15 12 11 23 12 half of my retirement income
No I am on course to achieve around three-quarters (75) of my 8 14 7 4 8 15 9 8 6 11 20 5 retirement income
Yes I am on course to achieve my 15 15 13 14 8 13 11 17 25 27 25 8 retirement income
CQ
CQ
39 | The Young Pragmatic and Penniless Generation
Chart 8 Young people in most countries expect to retire before 65 Q At what age do you expect to retire from all paid employment
Net
herl
ands
Ger
man
y
Swed
en
Uni
ted
Kin
gdom
Fran
ce
Spai
n
Pol
and
Hun
gary
Uni
ted
Stat
es
Cana
da
Chin
a
Japa
n
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
40 or under 0 1 1 0 0 1 3 1 5 12
41-50 1 2 3 5 2 2 6 3 9 4 37 9
51-59 4 4 4 6 2 4 11 5 7 10 30 1
60 5 11 8 12 10 13 19 12 12 16 21 27
61-64 2 11 10 2 20 7 4 13 5 3 1 2
65 17 22 44 31 34 32 16 26 26 32 3 25
66-69 42 32 15 9 12 29 20 13 9 9 0 1
70 19 11 10 18 10 5 10 9 13 12 0 6
71+ 5 5 5 9 4 5 5 3 7 5 1 4
Never 2 1 1 2 2 2 6 4 1 0 0
Donrsquot know 2 3 2 5 3 2 8 9 5 5 1 13
Mean 67 65 65 65 64 65 63 64 63 64 53 59
Median 67 65 65 65 65 65 65 65 65 65 55 60
Chart 9 Younger employees feel they donrsquot have money to invest for retirement Q What is the single biggest obstacle to you saving for retirement right now
Net
herl
ands
Ger
man
y
Swed
en
Uni
ted
Kin
gdom
Fran
ce
Spai
n
Pol
and
Hun
gary
Uni
ted
Stat
es
Cana
da
Chin
a
Japa
n
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
The uncertain economic environment 19 8 13 9 13 19 11 14 12 9 29 27
Lack of money to invest 28 41 33 43 47 34 48 55 47 50 6 19
Fear of poor investment returns over the coming years 2 5 10 7 5 6 8 2 6 8 14 6
Complexity of investment products 4 4 4 3 5 3 5 2 12 5
I donrsquot know how to go about investing for the long-term 2 3 10 8 5 5 3 3 6 8 7 9
The fees charged by financial services companies 2 4 4 2 4 3 4 2 3 5 2 5
I canrsquot afford to take financial advice 3 3 6 8 2 4 3 5 3 2 3 2
I donrsquot trust the financial services industry 12 11 8 6 5 10 6 2 2 3 5 4
I donrsquot see the need to save for the long-term 6 1 2 2 3 3 3 1 2 1 4 3
Concerns about unstable currencies currency fluctuations 2 5 1 3 3 3 4 3 4 5 15 2
Other (PLEASE STATE) 3 3 1 1 3 2 4 6 2 2 1
Donrsquot know 17 12 11 7 8 6 3 6 8 6 3 17
The Young Pragmatic and Penniless Generation | 40
Chart 10 More money would incentivize young employees to save for retirement Q Which if any of the following would encourage you to save for retirement
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsMore generous tax breaks on long-term savings and pensions 20 44 30 32 27 23 42 42 33 43 40 32 products
Ger
man
yG
erm
any
Access to financial education so that I am more aware of what 24 6 14 21 16 22 21 12 23 24 43 25 I need to do for myself
Swed
enSw
eden
Access to professional financial advice so that I have personalized
Uni
ted
20 24 23 23 15 21 25 9 22 23 44 13 U
nite
drecommendations on what steps
Kin
gdom
Kin
gdom
I need to take
Simpler investment products that 12 33 19 28 20 Fr
ance
18 27 16 32 28 36 10 Fr
ance
I can understand with less jargon
Better and more frequent information about my retirement 16 28 20 27 27 23
Spai
n20 18 25 31 45 22
Spai
nsavings
Better legal protection in case I am 12 18 13 18 10 24 18 13 13 19 21 6 P
olan
dP
olan
dsold the wrong product
A pay rise 46 54 44 64 55 50 70 72 67 64 53 37
A better retirement plan pension H
unga
ryH
unga
ry27 32 25 33 29 26 42 35 39 44 33 32 match from my employer
Other 4 2 1 1 2 2 3 3 2 U
nite
d3 0
Uni
ted
Stat
esSt
ates
Donrsquot know 17 9 16 10 10 12 3 8 8 5 3 17
Not applicable - I already have 3 3 4 2 2 1 1 1 2 2 3 sufficient savings Ca
nada
Cana
da
Chin
aCh
ina
Chart 11 A majority of younger employees do not have a written plan for retirement Q Which of the following best describes your retirement planning strategy
Japa
n Ja
pan
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
I have a written plan 7 18 10 9 6 8 6 5 13 10 8 4
I have a plan but it is not written 24 47 37 25 23 31 29 31 37 44 55 24
down
I do not have a plan 61 32 51 61 62 55 62 58 45 42 34 61
Donrsquot know 7 3 3 5 8 6 3 6 4 4 3 12
41 | The Young Pragmatic and Penniless Generation
Chart 12 For young employees friends and family are the leading source of retirement savings information Q And which of these sources (of information) is most important to you
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
Bank adviser 6 11 19 5 25 5 7 4 3 17 10 2 N
ethe
rlan
dsN
ethe
rlan
dsProfessional financial adviser 12 22 10 12 10 19 19 22 21 25 19 10
Insurance agent spokesperson 3 10 2 3 1 3 6 2 3 0 3 2 G
erm
any
Ger
man
yInsurance company website 3 1 3 2 4 4 2 2 1 3 1
Personal finance websites online 8 5 7 8 5 4 10 8 12 6 10 8 retirement planning tools Sw
eden
Swed
enPersonal finance media 2 2 2 2 2 6 3 1 2 1 6 2
Government website 7 1 3 6 U
nite
d5 2 3 3 2 3 7 1
Uni
ted
Kin
gdom
Kin
gdom
Bank website 2 3 3 2 1 0 3 2 1 6 3 3
My employer 12 8 4 9 4 7 5 12 8 5 4 1 Fr
ance
Fran
ceAccountant 2 6 4 4 1 3 1 3 5 5 1 3
Lawyer 2 3 1 2 2 8 4 2 1 2 2 0 Sp
ain
Spai
nFriends and family 21 22 30 28 24 26 18 24 26 20 25 24
None of these P
olan
dP
olan
dNot applicable 21 7 16 18 19 13 17 15 14 9 5 41
Hun
gary
Hun
gary
Chart 13 Most young workers feel their employer should provide some kind of pension Q In the future what if anything should employers do to help people plan for retirement
Uni
ted
Uni
ted
Stat
esSt
ates
Cana
daCa
nada
Chin
aCh
ina
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 Ja
pan
Japa
n Employers should be required to 24 43 20 40 21 26 20 28 37 34 20 30 contribute to workersrsquo pensions
Employers should be required to make a pension available but not to 12 13 7 17 20 15 15 4 11 14 22 5 contribute into it
Employers should not be required to provide pensions but should 15 9 12 8 9 8 11 6 11 9 9 11 provide information on how to plan for retirement
Employers should provide a range of flexible benefits and 13 18 18 16 15 27 25 28 21 22 45 12 allow individuals to choose which benefits they actually want
Nothing ndash it should be left to individual employees to take care 2 2 5 1 4 3 3 5 6 5 1 9 of themselves
Nothing ndash it should be left to the government to take care of its 2 5 5 2 5 8 15 14 1 4 0 4 citizens
Donrsquot know 30 10 32 17 27 12 12 15 13 13 3 29
The Young Pragmatic and Penniless Generation | 42
Chart 14 Workplace pensions are relatively low down in young workersrsquo priorities when choosing a job Q How important to you would the following workplace benefits be if you were choosing your next job
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsBasic salary 86 93 88 91 88 92 90 94 90 93 96 94
Holiday entitlement 87 94 89 91 92 94 91 94 93 94 96 91 G
erm
any
Ger
man
yOvertime and bonus pay 86 93 87 88 89 90 89 94 90 91 97 90
Location of workplace 88 91 86 92 89 90 89 92 93 93 92 86 Sw
eden
Swed
enMedical health insurance 73 92 84 65 86 87 88 87 93 94 98 83
Opportunities for career progression 86 91 81 90 90 94 91 94 92 91 96 81 U
nite
dU
nite
dAccess to a workplace retirement 85 85 81 82
Kin
gdom
78 84 80 78 84 86 93 74 K
ingd
omplan with employer contributions
Access to good training provision 85 87 85 88 86 91 85 93 86 90 95 74 Fr
ance
Fran
ceFlexible working hours 79 87 58 86 81 89 81 87 91 91 92 57
Life insurance 72 75 79 69 80 82 Sp
ain
84 80 81 88 93 74 Sp
ain
(death in service benefits)
Phased retirement or other employer programs providing for 74 54 75 71 72 81 76 74 76 81 91 65
Pol
and
Pol
and
a transition into retirement
Ability to work past the normal 68 57 64 65 64 74 72 65 74 76 80 70 retirement age H
unga
ryH
unga
ry
Access to a workplace retirement 62 74 61 68 59 77 61 47 68 74 89 65 plan without employer contributions U
nite
dU
nite
dSt
ates
Stat
esEmployee share plans 50 72 54 65 59 73 61 51 64 73 91 55
Access to creche help with the 67 75 64 56 69 79 75 83 58 69 89 68 cost of childcare Ca
nada
Cana
da
Opportunities for foreign travel 53 54 60 55 50 71 58 66 57 61 79 37
Company car 51 46 45 47 49 63 51 49 36 49 69 Ch
ina
39 Ch
ina
Japa
n Ja
pan
Chart 15 Young workers think the state pension will need to be reformed Q With the cost of government pensions becoming a greater concern as people live longer which if any of the following do you think
the government should undertake
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
The government should reduce the overall cost of state pension 15 33 16 15 16 20 28 22 21 26 30 16 provision by reducing the value of individual pension plans
The government should increase overall funding available for the 12 21 30 22 14 34 19 26 21 18 29 10 state pension through raising taxes
43 | The Young Pragmatic and Penniless Generation
he government should take a alanced approach with some 27 26 12 30 28 23 24 16 34 31 38 41 eductions in individual payments nd some increases in tax
he government should not do nything State pension provision 7 2 12 5 3 4 3 3 5 4 0 5 ill remain perfectly affordable in he future
onrsquot know 38 19 29 29 39 20 26 34 19 21 4 28
Net
herl
ands
art 16 Products which protect against investment risk are the most important to young workers ( interested) Thinking about the types of financial products you could purchase to help provide you with security in retirement on a scale of 1 to 5
how interested are you in the following options G
erm
any
Swed
en
Uni
ted
Kin
gdom
ase 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 Fr
ance
100 100 100 100 100 100 100 100 100 100 100 100
product providing a guaranteed etirement income stream or 75 81 73 76 74 83 78 76 87 85 94 69
Spai
nifetime income in retirement
product which protects my 74 79 73 76 72 82 77 74 84 86 94 65 etirement income against inflation P
olan
d
product which guarantees that I 72 82 73 78 75 81 76 73 86 86 90 67 onrsquot lose my initial investment H
unga
ry product which helps meet the ost of long-term care if I become 74 79 74 77 70 79 76 71 86 85 84 66
Uni
ted
nable to look after myself St
ates
product which protects my capital 71 81 71 76 68 76 77 73 84 83 93 65 rom poor investment returns Ca
nada
product which generates a etirement income and allows 69 78 71 75 68 81 77 72 84 86 94 70 e to take a lump sum from the
Chin
anvestment should I need to
product where the annual 66 78 68 75 72 79 77 70 85 86 87 64 anagement charges are kept low Ja
pan
product which enables me to eep some control over how my 71 73 70 75 72 80 75 69 88 85 91 63 avings are invested during my etirement
product which manages the sset allocation so that I am never 68 70 67 73 66 76 71 67 80 83 95 60 xposed to a level of risk Irsquom not omfortable with
product which continues to rovide a retirement income to my 74 78 71 75 73 81 79 73 86 82 94 60 pouse in the event that I die first
product which protects my family gainst having to pay estate taxes 73 76 71 74 75 81 75 69 82 82 89 56 hen I die
product which locks in investment 72 71 63 73 64 71 59 56 81 84 89 61 eturns during the good years
Tbra
Tawt
D
ChQ
B
Arl
Ar
Ad
Acu
Af
Armi
Am
Aksr
Aaec
Aps
Aaw
Ar
The Young Pragmatic and Penniless Generation | 44
Chart 19 Products which protect against investment risk are the most important to young workers ( interested) Q Thinking about the types of financial products you could purchase to help provide you with security in retirement on a scale of 1 to 5
how interested are you in the following options
Base 20-29 year olds
A product providing a guaranteed retirement income stream or lifetime income in retirement 82
A product which protects my retirement income against inflation 81
A product which guarantees that I donrsquot lose my initial investment 81
A product which helps meet the cost of long-term care if I become unable to look after myself 80
A product which protects my capital from poor investment returns 79
A product which generates a retirement income and allows me to take a lump sum from the investment should I need to 79
A product where the annual management charges are kept low 78
A product which enables me to keep some control over how my savings are invested during my retirement 77
A product which manages the asset allocation so that I am never exposed to a level of risk Irsquom not comfortable with 76
A product which continues to provide a retirement income to my spouse in the event that I die first 75
A product which protects my family against having to pay estate taxes when I die 72
A product which locks in investment returns during the good years 70
The lsquodefined ambitionrsquo retirement system in This removes some of the disadvantages of leaving
the Netherlands a sustainable retirement solution retirement liabilities exclusively up to employers
for young workers (defined benefit) or employees (defined contribution)
In the Netherlands as elsewhere young workers are faced In the Netherlands this is likely to involve legislation which
with an increasing retirement age decreasing government lets retirement funds automatically adjust pay-outs and
suppor t for retirement and declining traditional defined retirement age as life expectancy changes xii
benefit employer retirement plans Reforms proposed
by the Dutch may show a way for ward for all mature and This model has garnered interest elsewhere In the
aging economies United Kingdom Pensions Minister Steve Webb expressed
interest on a more limited scale with a government
rsquoDefined ambitionrsquo proposes that risks are not taken on fully guarantee for a minimum rate of return for defined
by either employer or employee but are shared contribution retirement plans
The Young Pragmatic and Penniless Generation | 26
Recommendations Enabling young workers to save The studyrsquos findings reveal that the majority of young workers (66) are either saving consistently or aspire to start saving but face challenges including debt low pay and funding for significant life events and generational changes to the economic landscape and government and employer support If young people are to achieve a prosperous retirement their willingness to save should be met with better opportunities to save Here is what can be done by employers governments and young people themselves to address retirement planning concerns for younger adults
27 | The Young Pragmatic and Penniless Generation
Individuals Employers and governments
Determine how much income you need in retirement Auto-enroll employees into a workplace retirement plan Young people accept the need to save for retirement but donrsquot If an auto-enrollment workplace retirement plan is feasible
know how to act on that need They can become more retirement this can play a major role in getting young workers saving early
savvy simply by talking to friends and family (as do 24 of and regularly Combined with auto-escalation (the automatic
our respondents already) or employers going online to use annual increase in retirement plan contributions) and matching
retirement calculators or reading the personal finance media contributions it can lead to greater retirement readiness
Seek out a financial advisor Provide more flexible savings products through the workplace Young people are faced with life events that make it easy to Not all savings journeys start with a retirement plan particularly
feel overwhelmed by financial priorities in addition to retirement for young people who may think of retirement as lsquotoo far awayrsquo
planning Soliciting advice from a finance professional early in Employers can kick-start the savings habit in younger workers
life (17 of young employees have done so already) helps with by providing flexible easy to access and easy to understand
planning and priorities and making sense of long-term finances savings plans as a more attractive starter option
Start saving now and save consistently Make company retirement plans more portable As with all employees young people will strengthen their Young people move jobs much more often than previous
retirement readiness simply by saving regularly Today only 25 generations of employees so savings like DC retirement plans
of young people always save yet even small regular amounts need to follow employees when they change jobs
will improve retirement readiness over time
Make tax incentives more effective Ask your employer about workplace retirement savings plans All countries encourage long-term savings through tax relief but
and other retirement benefits young people often arenrsquot aware of this or donrsquot understand it
While one third (33) of young people believe that a workplace A more targeted system of tax relief could help provide clearer
retirement savings plan provides a major opportunity to start and simpler signals to younger people about the financial
saving employers often experience difficulties in engaging benefits of long-term saving
younger employees in discussions about retirement planning
The workplace is an important channel for achieving retirement Make better financial education central to the workplace readiness so be sure to max out on any employer contributions retirement offer
Young people who aspire to save may be prevented from
doing so by setting the wrong financial priorities Workplace
retirement education ndash alongside professional advice ndash can help
guide young people toward the right long-term priorities at an
earlier age in life
The Young Pragmatic and Penniless Generation | 28
29 | The Young Pragmatic and Penniless Generation
Glossary
Aegon Retirement Readiness Index (ARRI) c areer average retirement plan The ARRI assesses the relative levels of retirement A type of defined benefit plan that is based on an
preparedness of employees across different countries on a employeersquos average retirement earnings over the duration
scale from 1 to 10 The Index is based on three questions of plan membership Same as average salary plan
covering attitudes and three questions covering behaviors
defined ambition (DA) plan average salary plan A type of retirement plan in which retirement plan risks
A type of defined benefit plan that is based on an are shared between the employer and the employee
employeersquos average retirement earnings over the duration It offers greater certainty to savers around the final value
of plan membership Same as career average plan of their retirement assets than in DC plans and less
cost volatility for employers than with DB plans In the
a nnuity Netherlands Defined Ambition (DA) retirement plans are
A form of contract sold by life insurance companies that being introduced in order to help relieve the pressure on
guarantees a fixed or variable payment to the annuitant employers while still trying to provide employees with a
at some future time usually retirement All capital in the more secure retirement plan The United Kingdom too is
annuity grows tax-deferred looking at DA retirement plans as a solution
auto enrollment defined benefit (DB) plan An employer-sponsored retirement plan in which the An employer-sponsored retirement plan where the amount
employer is able to enroll an employee without that of future benefits an employee will receive from the plan is
employeersquos express authorization The employer determines defined typically by a formula based on salary history and
what percentage of the employeersquos salary or wages is years of service The amount of contributions the employer
contributed to the plan The employee is able to change is required to make will depend on the investment returns
this percentage and can opt out of enrollment in the plan experienced by the plan and the benefits promised
Contrast defined contribution plan
a uto-escalation A feature of a plan which automatically increases the defined contribution (DC) plan percentage of (retirement) funds saved from salary An employer-sponsored retirement plan such as a 401(k)
This feature generally uses a default or standard plan or a 403(b) plan in the United States in which
contribution escalation rate contributions are made to individual participant accounts
Depending on the type of DC plan contributions may be
B aby Boomers made by the employee the employer or both
A term used to refer to people generally born between
the end of World War II in 1945 and the mid 1960s The employeersquos benefits at retirement or termination of
Other generations Silent Generation - the generation born employment are based on the employee and employer
between 1925 and 1945 Generation X - the generation contributions and earnings and losses on those
born between 1965 and 1979 Millennials or Generation contributions See also 401(k) and 403(b) plan
Y - the generation born between 1980 and 2000 and often Contrast defined benefit plan
classified as the children of Baby Boomers
The Young Pragmatic and Penniless Generation | 30
401(k) plan An employer sponsored retirement plan that enables
employees to make tax-deferred contributions from their
salaries to the plan
403(b) plan An employer-sponsored defined contribution plan that
enables employees of universities public schools and
non-profit organizations to make tax-deferred contributions
from their salaries to the plan
final salary plan A type of defined benefit plan in which retirement
benefits are based on final retirement salary in the years
immediately before retirement benefits are received
Millennials A term used to refer to the people born from about 1980
to 2000 brought up using digital technology They are
often classified as the children of Baby Boomers
r etirement (or pension) plan Provides replacement for salary when a person is no
longer working due to retirement In the case of a defined
benefit retirement plan the employer or union contributes
to the plan which pays a predetermined benefit for the
rest of the employeersquos life based on length of service and
salary Payments may be made either directly or through
an annuity Retirement plan payments are taxable income
to recipients in the year received The employer or union
has fiduciary responsibility to invest the retirement plan
funds in stocks bonds real estate and other assets earn
a satisfactory rate of return and make payments to retired
workers Retirement plan funds holding trillions of dollars
are one of the largest investment forces in the stock
bond and real estate markets If the employer defaults in
the United States retirement plan payments are usually
guaranteed by the Pension Benefit Guaranty Corporation
(PBGC)
variable annuities (VA) An insurance contract in which the insurance company
guarantees a minimum payment at the end of the
accumulation period The payments may vary depending
on the financial performance of the managed portfolio
31 | The Young Pragmatic and Penniless Generation
About Aegon Transamerica Center for Retirement Studiesreg and Cicero Consulting
Aegon Transamerica Center Aegon is an international life insurance pensions and asset reg management company with businesses in over 20 markets for Retirement Studies in the Americas Europe and Asia Aegon companies employ The Transamerica Center for Retirement Studiesreg (TCRS) is
around 24000 people and serve millions of customers a division of the Transamerica Institute a nonprofit private
worldwide foundation TCRS is dedicated to educating the public on
wwwaegoncom emerging trends surrounding retirement security in the
United States TCRSrsquo research emphasizes employer-sponsored
In 2010 Aegon became a founding member of the Global retirement plans issues faced by small to mid-sized companies
Coalition on Aging which seeks to raise awareness of aging and their employees and the implications of legislative and
issues among policymakers and the general public A major aim regulatory changes Transamerica Institute is funded by
of the coalition is to transform the way we think and speak contributions from Transamerica Life Insurance Company and
about aging replacing the familiar rhetoric of lsquoproblemsrsquo with its affiliates and may receive funds from unaffiliated third-
a more positive discussion of lsquopossibilitiesrsquo and lsquoopportunitiesrsquo parties For more information about TCRS please refer to
wwwglobalcoalitiononagingcom wwwtransamericacenterorg
Cicero Consulting A leading consultancy firm serving the banking insurance and
asset management sector Cicero specializes in public policy
and communications consulting as well as global thought
leadership and independent market research Cicero was
established in 2001 and now operates from offices in London
Brussels Washington and Singapore As a market leader in
pensions and retirement research Cicero designed
and analyzed the research and contributed to the report
wwwcicero-groupcom
The Young Pragmatic and Penniless Generation | 32
Marta acebo Mark Green Patricia Plas
Paula alvarez douGlas henck scott roane
Frits bart wendel hoFMan thurstan robinson
Grace basile
lynette belFry
andrew berwick
Frans van der horst
tatsuo kai
herMan kaPPelle
Patti rowey
sarah russell
Joost van schaGen
robin boon Gaacutebor kePecs dick schiethart
bert-JaaP brons Marco keiM erik schouten
douG brooks
libby buet
kent callahan
JaiMe kirkPatrick
bas knol
roGer koch
anGela seyMour Jackson
kate sMith
renske stoker
Jeanne de cervens
dana chen
Peter kunkel
alexander kuiPers
eyleen sun
MartiJn tans
arkadiusz chMurzynski
heidi cho
brian lewis
Mike linder
GreG tucker
Mark twiGG
siMon clow siMon luke catherine wanG
robert colliGnon Jason Ma Marc van weede
catherine collinson GrzeGorz Mathea tiM willaert
wendy daniels
Michel denizot
edit drevenka
Paul Middleton
takaoh MiyaGawa
david Moulton
daniel wriGht
alex wynaendts
MacieJ zaPala
Jan driessen
kelly Fu
adrian Grace
Mark Mullin
Marcelle noltenius
stiG nybo
Peacuteter zatykoacute
vicky zeldin
Disclaimer This repor t contains general information only and does
not constitute a solicitation or offer No rights can be
derived from this repor t Aegon its par tners and any of
their affiliates or employees do not guarantee warrant
or represent the accuracy or completeness of the
information contained in the repor t
Acknowledgements
33 | The Young Pragmatic and Penniless Generation
References and notes i For a comparison of different retirement systems see lsquoPensions at a Glance 2011rsquo OECD 2011 ii As the survey was carried out online the survey results in China are based toward people living in urban areas iii ldquoPensions Marketsrdquo TheCityUK March 2013 p9 iv Global Employment Trends for Youth 2013 A generation at risk International Labour Organisation 2013 p2 v Eurostat July 2013 vi OECD Employment and Labour Markets Key Tables from OECD No 2 2012 vii The Federal Reserve Bank of New York 2012 Quarterly Report on Household Debt March 29 2013 viii World Bank ix lsquoWorld-class povertyrsquo The Economist February 27 2013
httpwwweconomistcomblogsanalects201302chinas-poor x lsquoThe Chinese slow down in char tsrsquo The Economist July 15 2013 xi lsquoChina rsquos welfare system difficult inflexible and blatantly unfairrsquo The Guardian April 23 2013
httpwwwtheguardiancomglobal-development2013apr23china-welfare-system-inflexible-unfair xii lsquo The Dutch experience with Defined Ambition pensions and the impact on companiesrsquo Aegon Global Pensions March 12 2013
httpwwwaegonglobalpensionscomenHomePublicationsNews-archiveNewsThe-Dutch-experience-with-Defined
Ambition-pensions-and-what-that-may-mean-for-companies-in-the-Netherlands-and-the-UK
shy
The Young Pragmatic and Penniless Generation | 34
Contact information HE ADQUARTER S
Aegon NV
PO Box 85
2501 CB The Hague
Telephone +31 70 344 32 10
w w waegoncom
MEDIA REL ATIONS
Telephone +31 70 344 89 56
Email gcc-iraegoncom
Countr y Index score
Germany 548
China 541
Canada 524
United States 519
The Netherlands 488
United Kingdom 486
Sweden 483
France 475
Hungar y 473
Poland 463
Spain 440
Japan 430
Total 489
Appendix 1 Aegon Retirement Readiness Index (ARRI) - technical note
Aegon Retirement Readiness Index (ARRI)-technical note 2013 Weightings (2012 in brackets) A sample of 12000 pre and post retirees was drawn from 1 Personal responsibilit y 20 (30)
twelve countries Of these 10800 (90) were pre-retirees 2 Level of awareness 30 (35)
and these were chosen for fur ther analysis of their plans 3 Financial capability Understanding 30 (25)
for retirement The Index that was developed forms an 4 Retirement planning 50 (50)
assessment of how well an individual perceives the adequacy 5 Financial preparedness 60 (60)
of his her own finances and financial awareness specifically 6 Income replacement 35 (35)
for addressing his retirement needs
Note that the weights devised to show the relative
The lsquotargetrsquo for the Index impor tance of each question in calculating the Index add to
The question on current savings activity was designated as the 225 These were then re-scaled so that a final scale of 1 to
target question (dependent variable) for predicting the level of 10 was calculated
preparedness for retirement Responses to this question were
then correlated with each of the six key questions (variables) Final scores by country below to understand which were driving the activity These weightings were multiplied by the actual scores for each
This was done because it was not felt to be correct to give respondent for each of the six Index questions and aggregated
each of the six variables described below an equal weight as to obtain a provisional score This was then adjusted to
they appeared to have quite different relationships to the give countr y scores out of 1 to 10 (A score of 1 to 10 had
target question sufficient differentiation to be used as the scale for analysis)
1 Personal responsibilit y for income in retirement
2 Level of awareness of need to plan for retirement
3 F inancial capability Understanding of financial matters
regarding plans for retirement
4 Retirement planning Level of development of plans
5 Financial preparedness for retirement
6 Income replacement Level of projected income replacement
The weighting To estimate the statistical significance of the decline in overall
scores in this yearrsquos Index is theoretically incalculable
Two things have changed from 2012 to 2013
1 C anada and China have joined the sample
2 The new countries have thus influenced the weights of
emphasis placed on the 6 variables used to calculate
the score hence the weights attached to the complex
calculation have changed
However it is noticeable that for countries which were sampled
in both time periods the mean scores for the six individual
variables have almost invariably declined and on average more
than half of them have shown a significant level of decline
In particular the question lsquoDo you think you will achieve this
incomersquo has for all countries shown a significant level of
decline We thus hypothesize that the comparative results
show a significant decline
The Young Pragmatic and Penniless Generation | 36
Net
herl
ands
Net
herl
ands
Net
herl
ands
Ger
man
yG
erm
any
Ger
man
yBase 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
Better off 7 4 23 Sw
eden
Swed
en11 5 7 8 3 11 14 50 5
Swed
en
About the same 19 18 27 23 8 19 18 13 29 29 24 21 U
ntie
dU
ntie
dU
nite
d Worse off 66 74 41 58 79 69 71 76 51 47 21 55
Kin
gdom
Kin
gdom
Kin
gdom
Donrsquot know 9 3 9 9 9 4 4 8 9 10 6 19
Fran
ceFr
ance
Fran
ce
Chart 2 Education of 20 ndash 29 year olds by country Q Please choose from the following list the highest level of educational or professional qualification you have
Spai
nSp
ain
Spa
in
Pol
and
Pol
and
Pol
and
Hun
gary
Hun
gary
Hun
gar y
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
dU
nite
d 100 100 100 100 100 100 100 100 100
Stat
es100 100 100
Stat
esSt
ates
Less than high school graduate 2 44 6 14 1 3 2 7 1 3 Ca
nada
Cana
daC
anad
aHigh school graduate 11 33 53 23 22 22 4 41 14 21 1 2
Some college or trade school 46 2 9 9 9 19 37 14 28 20 4 33 Ch
ina
Chin
aC
hina
College degree University degree 31 15 27 30 41 43 21 33 50 46 9 57
Postgraduate degree or 8 3 3 23 25 11 36 1 8 9 80 6 qualification Ja
pan
Japa
n Ja
pan
Other 2 4 1 1 1 2 0 5 0 6 2
None 0 1 1 0 1 0 0
NET Less than undergrad degree 61 82 70 47 34 46 43 66 42 45 11 37
NET Undergrad degree or higher 39 18 30 53 66 54 57 34 58 55 89 63
Chart 3 Aegon Retirement Readiness Index scores for young employees by country
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
NET Low Index (0-5) 80 64 79 81 85 78 81 73 65 61 61 87
NET Medium Index (6-7) 15 30 18 15 14 21 17 23 25 31 31 12
NET High Index (8-10) 4 6 3 3 1 2 2 4 10 8 7 1
Appendix 2 Country comparisons Chart 1 The majority of young employees believe that they will be worse off in retirement compared to their parents Q Do you think that future generations of retirees will be better off or worse off than those currently in retirement
37 | The Young Pragmatic and Penniless Generation
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsI always make sure that 27 34 27 26 17 14 19 22 35 33 32 20 I am saving for retirement
I only save for retirement G
erm
any
Ger
man
y21 27 20 13 17 21 16 6 17 24 20 24 occasionally from time to time
I am not saving for retirement now 6 11 8 11 5 15 9 4 10 8 9 5 although I have in the past Sw
eden
Swed
en
I am not saving for retirement 35 23 34 46 53 40 49 54 36 33 38 46 though I do intend to U
nite
dU
ntie
dK
ingd
omK
ingd
om I have never saved for retirement and 11 6 10 5 8 10 6 13 3 2 1 6 donrsquot intend to
Fran
ceFr
ance
Chart 5 Younger people are more likely not to be using any means of retirement savings Sp
ain
Spai
nQ Which financial means if any are you currently using to prepare for your retirement
Pol
and
Pol
and
only asked in Germany only asked in Spain
Hun
gary
Hun
gary
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
dSt
ates
Stat
es100 100 100 100 100 100 100 100 100 100 100 100
Defined benefit plan 16 10 25 29 15 3 76 11 20 13 5 Ca
nada
Cana
daDefined contribution plan 28 10 17 19 19 14 10 23 40 7 3
Private pension 8 18 14 10 5 9 4 13 12 40 66 4 Ch
ina
Chin
a Government pension social security 12 43 14 21 8 7 4 18 27 33 71 35
Stocks 5 12 14 7 4 17 7 2 13 10 23 9
Bonds 1 8 5 6 2 16 4 2 8 13 14 3 Ja
pan
Japa
n
Mutual funds 2 14 23 4 2 10 3 4 7 16 9 6
Investment insurances (annuities) 2 3 2 3 2 9 4 5 2 4 6 1
Savings accounts 23 37 38 25 23 6 29 15 36 37 65 36
Investment property 2 10 6 7 9 2 5 2 5 11 18 1
Employee stock purchase 1 1 1 4 1 29 0 4 1 7 1
My home 10 5 8 7 7 8 4 6 6 14 30 1
Reverse mortgage 1 4 2 4
My business 2 1 3 2 2 4 1 1 2 4 12 1
Inheritance 3 11 7 11 7 9 9 8 7 9 6 2
Annuities 1 15 2 2 1 4 3 2 1 2 8
Long-term care insurance 2 1 3 2 9 5 1 6 4 7 1
Life insurance 6 11 8 8 14 3 18 15 19 18 36 17
Unterstuumltzungskasse aus 2 Eigenmitteln finanziert
Unterstuumltzungskasse vom 2 Arbeitgeber finanziert
Chart 4 Younger employees are much more likely to aspire to save for retirement Which of the following best explains your approach to saving for retirement This can include money you contribute to any long-term
investment including pensions stocks and shares investment-linked insurances property etc
Q
The Young Pragmatic and Penniless Generation | 38
Plan de empleo mixto 2 (combinacioacuten de las dos anteriores)
Other 1 6 4 0 1 2 2 3 2 2 3 3
None nothing 8 14 12 23 25 31 6 27 21 17 3 24
Donrsquot know 29 6 17 13 19 8 4 9 7 7 0 9
hart 6 The younger generation has more negative associations of retirement Which if any of the following words do you most associate with retirement
Net
herl
ands
Net
herl
ands
Ger
man
yG
erm
any
Swed
enSw
eden
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
d100 100 100 100 100 100 100 100 100 100 100 100
Kin
gdom
Kin
gdom
Freedom 35 32 36 39 19 26 11 20 35 40 37 33
Opportunity 7 27 25 18 4 8 9 10 17 16 9 16 Fr
ance
Fran
ceLeisure 58 48 36 41 23 24 43 32 50 50 55 6
Excitement 2 5 3 8 2 6 1 2 17 17 4 3 Sp
ain
Spai
nPoverty 11 26 23 11 26 14 37 44 7 5 6 20
Insecurity 34 24 18 16 20 18 35 56 10 9 18 44 P
olan
dP
olan
dLoneliness 4 10 17 16 12 7 11 8 5 9 20 12
Ill health 2 19 7 14 15 9 49 23 6 6 29 11 H
unga
ryH
unga
ryDependent on others 11 11 5 18 14 8 18 19 14 6 11 4
Tired 3 4 8 10 14 10 17 6 7 7 13 19 U
nite
dU
nite
dFar away 38 19 25 21 61 32 2 13 33
Stat
es33 14 22
Stat
es
Boredom 14 16 6 12 16 12 15 8 12 12 16 17 Ca
nada
Cana
daEnjoyment 21 16 17 23 14 29 5 3 37 37 35 15
None of the above 0 1 1 2 0 2 1 1 2 2 1 2
Donrsquot know 2 2 3 3 2 2 1 2 0 Ch
ina
6 Ch
ina
hart 7 Many young employees think they are not on course to achieve target retirement income Ja
pan
Japa
n Do you think you will achieve this income [your estimated income needed in retirement]
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
I donrsquot know if I am on course to 56 37 57 59 50 39 49 48 48 41 22 68 achieve my retirement income
No I am on course to achieve around one-quarter (25) of my 10 14 9 13 15 14 14 13 10 10 10 7 retirement income
No I am on course to achieve around 12 20 14 11 19 19 18 15 12 11 23 12 half of my retirement income
No I am on course to achieve around three-quarters (75) of my 8 14 7 4 8 15 9 8 6 11 20 5 retirement income
Yes I am on course to achieve my 15 15 13 14 8 13 11 17 25 27 25 8 retirement income
CQ
CQ
39 | The Young Pragmatic and Penniless Generation
Chart 8 Young people in most countries expect to retire before 65 Q At what age do you expect to retire from all paid employment
Net
herl
ands
Ger
man
y
Swed
en
Uni
ted
Kin
gdom
Fran
ce
Spai
n
Pol
and
Hun
gary
Uni
ted
Stat
es
Cana
da
Chin
a
Japa
n
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
40 or under 0 1 1 0 0 1 3 1 5 12
41-50 1 2 3 5 2 2 6 3 9 4 37 9
51-59 4 4 4 6 2 4 11 5 7 10 30 1
60 5 11 8 12 10 13 19 12 12 16 21 27
61-64 2 11 10 2 20 7 4 13 5 3 1 2
65 17 22 44 31 34 32 16 26 26 32 3 25
66-69 42 32 15 9 12 29 20 13 9 9 0 1
70 19 11 10 18 10 5 10 9 13 12 0 6
71+ 5 5 5 9 4 5 5 3 7 5 1 4
Never 2 1 1 2 2 2 6 4 1 0 0
Donrsquot know 2 3 2 5 3 2 8 9 5 5 1 13
Mean 67 65 65 65 64 65 63 64 63 64 53 59
Median 67 65 65 65 65 65 65 65 65 65 55 60
Chart 9 Younger employees feel they donrsquot have money to invest for retirement Q What is the single biggest obstacle to you saving for retirement right now
Net
herl
ands
Ger
man
y
Swed
en
Uni
ted
Kin
gdom
Fran
ce
Spai
n
Pol
and
Hun
gary
Uni
ted
Stat
es
Cana
da
Chin
a
Japa
n
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
The uncertain economic environment 19 8 13 9 13 19 11 14 12 9 29 27
Lack of money to invest 28 41 33 43 47 34 48 55 47 50 6 19
Fear of poor investment returns over the coming years 2 5 10 7 5 6 8 2 6 8 14 6
Complexity of investment products 4 4 4 3 5 3 5 2 12 5
I donrsquot know how to go about investing for the long-term 2 3 10 8 5 5 3 3 6 8 7 9
The fees charged by financial services companies 2 4 4 2 4 3 4 2 3 5 2 5
I canrsquot afford to take financial advice 3 3 6 8 2 4 3 5 3 2 3 2
I donrsquot trust the financial services industry 12 11 8 6 5 10 6 2 2 3 5 4
I donrsquot see the need to save for the long-term 6 1 2 2 3 3 3 1 2 1 4 3
Concerns about unstable currencies currency fluctuations 2 5 1 3 3 3 4 3 4 5 15 2
Other (PLEASE STATE) 3 3 1 1 3 2 4 6 2 2 1
Donrsquot know 17 12 11 7 8 6 3 6 8 6 3 17
The Young Pragmatic and Penniless Generation | 40
Chart 10 More money would incentivize young employees to save for retirement Q Which if any of the following would encourage you to save for retirement
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsMore generous tax breaks on long-term savings and pensions 20 44 30 32 27 23 42 42 33 43 40 32 products
Ger
man
yG
erm
any
Access to financial education so that I am more aware of what 24 6 14 21 16 22 21 12 23 24 43 25 I need to do for myself
Swed
enSw
eden
Access to professional financial advice so that I have personalized
Uni
ted
20 24 23 23 15 21 25 9 22 23 44 13 U
nite
drecommendations on what steps
Kin
gdom
Kin
gdom
I need to take
Simpler investment products that 12 33 19 28 20 Fr
ance
18 27 16 32 28 36 10 Fr
ance
I can understand with less jargon
Better and more frequent information about my retirement 16 28 20 27 27 23
Spai
n20 18 25 31 45 22
Spai
nsavings
Better legal protection in case I am 12 18 13 18 10 24 18 13 13 19 21 6 P
olan
dP
olan
dsold the wrong product
A pay rise 46 54 44 64 55 50 70 72 67 64 53 37
A better retirement plan pension H
unga
ryH
unga
ry27 32 25 33 29 26 42 35 39 44 33 32 match from my employer
Other 4 2 1 1 2 2 3 3 2 U
nite
d3 0
Uni
ted
Stat
esSt
ates
Donrsquot know 17 9 16 10 10 12 3 8 8 5 3 17
Not applicable - I already have 3 3 4 2 2 1 1 1 2 2 3 sufficient savings Ca
nada
Cana
da
Chin
aCh
ina
Chart 11 A majority of younger employees do not have a written plan for retirement Q Which of the following best describes your retirement planning strategy
Japa
n Ja
pan
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
I have a written plan 7 18 10 9 6 8 6 5 13 10 8 4
I have a plan but it is not written 24 47 37 25 23 31 29 31 37 44 55 24
down
I do not have a plan 61 32 51 61 62 55 62 58 45 42 34 61
Donrsquot know 7 3 3 5 8 6 3 6 4 4 3 12
41 | The Young Pragmatic and Penniless Generation
Chart 12 For young employees friends and family are the leading source of retirement savings information Q And which of these sources (of information) is most important to you
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
Bank adviser 6 11 19 5 25 5 7 4 3 17 10 2 N
ethe
rlan
dsN
ethe
rlan
dsProfessional financial adviser 12 22 10 12 10 19 19 22 21 25 19 10
Insurance agent spokesperson 3 10 2 3 1 3 6 2 3 0 3 2 G
erm
any
Ger
man
yInsurance company website 3 1 3 2 4 4 2 2 1 3 1
Personal finance websites online 8 5 7 8 5 4 10 8 12 6 10 8 retirement planning tools Sw
eden
Swed
enPersonal finance media 2 2 2 2 2 6 3 1 2 1 6 2
Government website 7 1 3 6 U
nite
d5 2 3 3 2 3 7 1
Uni
ted
Kin
gdom
Kin
gdom
Bank website 2 3 3 2 1 0 3 2 1 6 3 3
My employer 12 8 4 9 4 7 5 12 8 5 4 1 Fr
ance
Fran
ceAccountant 2 6 4 4 1 3 1 3 5 5 1 3
Lawyer 2 3 1 2 2 8 4 2 1 2 2 0 Sp
ain
Spai
nFriends and family 21 22 30 28 24 26 18 24 26 20 25 24
None of these P
olan
dP
olan
dNot applicable 21 7 16 18 19 13 17 15 14 9 5 41
Hun
gary
Hun
gary
Chart 13 Most young workers feel their employer should provide some kind of pension Q In the future what if anything should employers do to help people plan for retirement
Uni
ted
Uni
ted
Stat
esSt
ates
Cana
daCa
nada
Chin
aCh
ina
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 Ja
pan
Japa
n Employers should be required to 24 43 20 40 21 26 20 28 37 34 20 30 contribute to workersrsquo pensions
Employers should be required to make a pension available but not to 12 13 7 17 20 15 15 4 11 14 22 5 contribute into it
Employers should not be required to provide pensions but should 15 9 12 8 9 8 11 6 11 9 9 11 provide information on how to plan for retirement
Employers should provide a range of flexible benefits and 13 18 18 16 15 27 25 28 21 22 45 12 allow individuals to choose which benefits they actually want
Nothing ndash it should be left to individual employees to take care 2 2 5 1 4 3 3 5 6 5 1 9 of themselves
Nothing ndash it should be left to the government to take care of its 2 5 5 2 5 8 15 14 1 4 0 4 citizens
Donrsquot know 30 10 32 17 27 12 12 15 13 13 3 29
The Young Pragmatic and Penniless Generation | 42
Chart 14 Workplace pensions are relatively low down in young workersrsquo priorities when choosing a job Q How important to you would the following workplace benefits be if you were choosing your next job
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsBasic salary 86 93 88 91 88 92 90 94 90 93 96 94
Holiday entitlement 87 94 89 91 92 94 91 94 93 94 96 91 G
erm
any
Ger
man
yOvertime and bonus pay 86 93 87 88 89 90 89 94 90 91 97 90
Location of workplace 88 91 86 92 89 90 89 92 93 93 92 86 Sw
eden
Swed
enMedical health insurance 73 92 84 65 86 87 88 87 93 94 98 83
Opportunities for career progression 86 91 81 90 90 94 91 94 92 91 96 81 U
nite
dU
nite
dAccess to a workplace retirement 85 85 81 82
Kin
gdom
78 84 80 78 84 86 93 74 K
ingd
omplan with employer contributions
Access to good training provision 85 87 85 88 86 91 85 93 86 90 95 74 Fr
ance
Fran
ceFlexible working hours 79 87 58 86 81 89 81 87 91 91 92 57
Life insurance 72 75 79 69 80 82 Sp
ain
84 80 81 88 93 74 Sp
ain
(death in service benefits)
Phased retirement or other employer programs providing for 74 54 75 71 72 81 76 74 76 81 91 65
Pol
and
Pol
and
a transition into retirement
Ability to work past the normal 68 57 64 65 64 74 72 65 74 76 80 70 retirement age H
unga
ryH
unga
ry
Access to a workplace retirement 62 74 61 68 59 77 61 47 68 74 89 65 plan without employer contributions U
nite
dU
nite
dSt
ates
Stat
esEmployee share plans 50 72 54 65 59 73 61 51 64 73 91 55
Access to creche help with the 67 75 64 56 69 79 75 83 58 69 89 68 cost of childcare Ca
nada
Cana
da
Opportunities for foreign travel 53 54 60 55 50 71 58 66 57 61 79 37
Company car 51 46 45 47 49 63 51 49 36 49 69 Ch
ina
39 Ch
ina
Japa
n Ja
pan
Chart 15 Young workers think the state pension will need to be reformed Q With the cost of government pensions becoming a greater concern as people live longer which if any of the following do you think
the government should undertake
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
The government should reduce the overall cost of state pension 15 33 16 15 16 20 28 22 21 26 30 16 provision by reducing the value of individual pension plans
The government should increase overall funding available for the 12 21 30 22 14 34 19 26 21 18 29 10 state pension through raising taxes
43 | The Young Pragmatic and Penniless Generation
he government should take a alanced approach with some 27 26 12 30 28 23 24 16 34 31 38 41 eductions in individual payments nd some increases in tax
he government should not do nything State pension provision 7 2 12 5 3 4 3 3 5 4 0 5 ill remain perfectly affordable in he future
onrsquot know 38 19 29 29 39 20 26 34 19 21 4 28
Net
herl
ands
art 16 Products which protect against investment risk are the most important to young workers ( interested) Thinking about the types of financial products you could purchase to help provide you with security in retirement on a scale of 1 to 5
how interested are you in the following options G
erm
any
Swed
en
Uni
ted
Kin
gdom
ase 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 Fr
ance
100 100 100 100 100 100 100 100 100 100 100 100
product providing a guaranteed etirement income stream or 75 81 73 76 74 83 78 76 87 85 94 69
Spai
nifetime income in retirement
product which protects my 74 79 73 76 72 82 77 74 84 86 94 65 etirement income against inflation P
olan
d
product which guarantees that I 72 82 73 78 75 81 76 73 86 86 90 67 onrsquot lose my initial investment H
unga
ry product which helps meet the ost of long-term care if I become 74 79 74 77 70 79 76 71 86 85 84 66
Uni
ted
nable to look after myself St
ates
product which protects my capital 71 81 71 76 68 76 77 73 84 83 93 65 rom poor investment returns Ca
nada
product which generates a etirement income and allows 69 78 71 75 68 81 77 72 84 86 94 70 e to take a lump sum from the
Chin
anvestment should I need to
product where the annual 66 78 68 75 72 79 77 70 85 86 87 64 anagement charges are kept low Ja
pan
product which enables me to eep some control over how my 71 73 70 75 72 80 75 69 88 85 91 63 avings are invested during my etirement
product which manages the sset allocation so that I am never 68 70 67 73 66 76 71 67 80 83 95 60 xposed to a level of risk Irsquom not omfortable with
product which continues to rovide a retirement income to my 74 78 71 75 73 81 79 73 86 82 94 60 pouse in the event that I die first
product which protects my family gainst having to pay estate taxes 73 76 71 74 75 81 75 69 82 82 89 56 hen I die
product which locks in investment 72 71 63 73 64 71 59 56 81 84 89 61 eturns during the good years
Tbra
Tawt
D
ChQ
B
Arl
Ar
Ad
Acu
Af
Armi
Am
Aksr
Aaec
Aps
Aaw
Ar
The Young Pragmatic and Penniless Generation | 44
Recommendations Enabling young workers to save The studyrsquos findings reveal that the majority of young workers (66) are either saving consistently or aspire to start saving but face challenges including debt low pay and funding for significant life events and generational changes to the economic landscape and government and employer support If young people are to achieve a prosperous retirement their willingness to save should be met with better opportunities to save Here is what can be done by employers governments and young people themselves to address retirement planning concerns for younger adults
27 | The Young Pragmatic and Penniless Generation
Individuals Employers and governments
Determine how much income you need in retirement Auto-enroll employees into a workplace retirement plan Young people accept the need to save for retirement but donrsquot If an auto-enrollment workplace retirement plan is feasible
know how to act on that need They can become more retirement this can play a major role in getting young workers saving early
savvy simply by talking to friends and family (as do 24 of and regularly Combined with auto-escalation (the automatic
our respondents already) or employers going online to use annual increase in retirement plan contributions) and matching
retirement calculators or reading the personal finance media contributions it can lead to greater retirement readiness
Seek out a financial advisor Provide more flexible savings products through the workplace Young people are faced with life events that make it easy to Not all savings journeys start with a retirement plan particularly
feel overwhelmed by financial priorities in addition to retirement for young people who may think of retirement as lsquotoo far awayrsquo
planning Soliciting advice from a finance professional early in Employers can kick-start the savings habit in younger workers
life (17 of young employees have done so already) helps with by providing flexible easy to access and easy to understand
planning and priorities and making sense of long-term finances savings plans as a more attractive starter option
Start saving now and save consistently Make company retirement plans more portable As with all employees young people will strengthen their Young people move jobs much more often than previous
retirement readiness simply by saving regularly Today only 25 generations of employees so savings like DC retirement plans
of young people always save yet even small regular amounts need to follow employees when they change jobs
will improve retirement readiness over time
Make tax incentives more effective Ask your employer about workplace retirement savings plans All countries encourage long-term savings through tax relief but
and other retirement benefits young people often arenrsquot aware of this or donrsquot understand it
While one third (33) of young people believe that a workplace A more targeted system of tax relief could help provide clearer
retirement savings plan provides a major opportunity to start and simpler signals to younger people about the financial
saving employers often experience difficulties in engaging benefits of long-term saving
younger employees in discussions about retirement planning
The workplace is an important channel for achieving retirement Make better financial education central to the workplace readiness so be sure to max out on any employer contributions retirement offer
Young people who aspire to save may be prevented from
doing so by setting the wrong financial priorities Workplace
retirement education ndash alongside professional advice ndash can help
guide young people toward the right long-term priorities at an
earlier age in life
The Young Pragmatic and Penniless Generation | 28
29 | The Young Pragmatic and Penniless Generation
Glossary
Aegon Retirement Readiness Index (ARRI) c areer average retirement plan The ARRI assesses the relative levels of retirement A type of defined benefit plan that is based on an
preparedness of employees across different countries on a employeersquos average retirement earnings over the duration
scale from 1 to 10 The Index is based on three questions of plan membership Same as average salary plan
covering attitudes and three questions covering behaviors
defined ambition (DA) plan average salary plan A type of retirement plan in which retirement plan risks
A type of defined benefit plan that is based on an are shared between the employer and the employee
employeersquos average retirement earnings over the duration It offers greater certainty to savers around the final value
of plan membership Same as career average plan of their retirement assets than in DC plans and less
cost volatility for employers than with DB plans In the
a nnuity Netherlands Defined Ambition (DA) retirement plans are
A form of contract sold by life insurance companies that being introduced in order to help relieve the pressure on
guarantees a fixed or variable payment to the annuitant employers while still trying to provide employees with a
at some future time usually retirement All capital in the more secure retirement plan The United Kingdom too is
annuity grows tax-deferred looking at DA retirement plans as a solution
auto enrollment defined benefit (DB) plan An employer-sponsored retirement plan in which the An employer-sponsored retirement plan where the amount
employer is able to enroll an employee without that of future benefits an employee will receive from the plan is
employeersquos express authorization The employer determines defined typically by a formula based on salary history and
what percentage of the employeersquos salary or wages is years of service The amount of contributions the employer
contributed to the plan The employee is able to change is required to make will depend on the investment returns
this percentage and can opt out of enrollment in the plan experienced by the plan and the benefits promised
Contrast defined contribution plan
a uto-escalation A feature of a plan which automatically increases the defined contribution (DC) plan percentage of (retirement) funds saved from salary An employer-sponsored retirement plan such as a 401(k)
This feature generally uses a default or standard plan or a 403(b) plan in the United States in which
contribution escalation rate contributions are made to individual participant accounts
Depending on the type of DC plan contributions may be
B aby Boomers made by the employee the employer or both
A term used to refer to people generally born between
the end of World War II in 1945 and the mid 1960s The employeersquos benefits at retirement or termination of
Other generations Silent Generation - the generation born employment are based on the employee and employer
between 1925 and 1945 Generation X - the generation contributions and earnings and losses on those
born between 1965 and 1979 Millennials or Generation contributions See also 401(k) and 403(b) plan
Y - the generation born between 1980 and 2000 and often Contrast defined benefit plan
classified as the children of Baby Boomers
The Young Pragmatic and Penniless Generation | 30
401(k) plan An employer sponsored retirement plan that enables
employees to make tax-deferred contributions from their
salaries to the plan
403(b) plan An employer-sponsored defined contribution plan that
enables employees of universities public schools and
non-profit organizations to make tax-deferred contributions
from their salaries to the plan
final salary plan A type of defined benefit plan in which retirement
benefits are based on final retirement salary in the years
immediately before retirement benefits are received
Millennials A term used to refer to the people born from about 1980
to 2000 brought up using digital technology They are
often classified as the children of Baby Boomers
r etirement (or pension) plan Provides replacement for salary when a person is no
longer working due to retirement In the case of a defined
benefit retirement plan the employer or union contributes
to the plan which pays a predetermined benefit for the
rest of the employeersquos life based on length of service and
salary Payments may be made either directly or through
an annuity Retirement plan payments are taxable income
to recipients in the year received The employer or union
has fiduciary responsibility to invest the retirement plan
funds in stocks bonds real estate and other assets earn
a satisfactory rate of return and make payments to retired
workers Retirement plan funds holding trillions of dollars
are one of the largest investment forces in the stock
bond and real estate markets If the employer defaults in
the United States retirement plan payments are usually
guaranteed by the Pension Benefit Guaranty Corporation
(PBGC)
variable annuities (VA) An insurance contract in which the insurance company
guarantees a minimum payment at the end of the
accumulation period The payments may vary depending
on the financial performance of the managed portfolio
31 | The Young Pragmatic and Penniless Generation
About Aegon Transamerica Center for Retirement Studiesreg and Cicero Consulting
Aegon Transamerica Center Aegon is an international life insurance pensions and asset reg management company with businesses in over 20 markets for Retirement Studies in the Americas Europe and Asia Aegon companies employ The Transamerica Center for Retirement Studiesreg (TCRS) is
around 24000 people and serve millions of customers a division of the Transamerica Institute a nonprofit private
worldwide foundation TCRS is dedicated to educating the public on
wwwaegoncom emerging trends surrounding retirement security in the
United States TCRSrsquo research emphasizes employer-sponsored
In 2010 Aegon became a founding member of the Global retirement plans issues faced by small to mid-sized companies
Coalition on Aging which seeks to raise awareness of aging and their employees and the implications of legislative and
issues among policymakers and the general public A major aim regulatory changes Transamerica Institute is funded by
of the coalition is to transform the way we think and speak contributions from Transamerica Life Insurance Company and
about aging replacing the familiar rhetoric of lsquoproblemsrsquo with its affiliates and may receive funds from unaffiliated third-
a more positive discussion of lsquopossibilitiesrsquo and lsquoopportunitiesrsquo parties For more information about TCRS please refer to
wwwglobalcoalitiononagingcom wwwtransamericacenterorg
Cicero Consulting A leading consultancy firm serving the banking insurance and
asset management sector Cicero specializes in public policy
and communications consulting as well as global thought
leadership and independent market research Cicero was
established in 2001 and now operates from offices in London
Brussels Washington and Singapore As a market leader in
pensions and retirement research Cicero designed
and analyzed the research and contributed to the report
wwwcicero-groupcom
The Young Pragmatic and Penniless Generation | 32
Marta acebo Mark Green Patricia Plas
Paula alvarez douGlas henck scott roane
Frits bart wendel hoFMan thurstan robinson
Grace basile
lynette belFry
andrew berwick
Frans van der horst
tatsuo kai
herMan kaPPelle
Patti rowey
sarah russell
Joost van schaGen
robin boon Gaacutebor kePecs dick schiethart
bert-JaaP brons Marco keiM erik schouten
douG brooks
libby buet
kent callahan
JaiMe kirkPatrick
bas knol
roGer koch
anGela seyMour Jackson
kate sMith
renske stoker
Jeanne de cervens
dana chen
Peter kunkel
alexander kuiPers
eyleen sun
MartiJn tans
arkadiusz chMurzynski
heidi cho
brian lewis
Mike linder
GreG tucker
Mark twiGG
siMon clow siMon luke catherine wanG
robert colliGnon Jason Ma Marc van weede
catherine collinson GrzeGorz Mathea tiM willaert
wendy daniels
Michel denizot
edit drevenka
Paul Middleton
takaoh MiyaGawa
david Moulton
daniel wriGht
alex wynaendts
MacieJ zaPala
Jan driessen
kelly Fu
adrian Grace
Mark Mullin
Marcelle noltenius
stiG nybo
Peacuteter zatykoacute
vicky zeldin
Disclaimer This repor t contains general information only and does
not constitute a solicitation or offer No rights can be
derived from this repor t Aegon its par tners and any of
their affiliates or employees do not guarantee warrant
or represent the accuracy or completeness of the
information contained in the repor t
Acknowledgements
33 | The Young Pragmatic and Penniless Generation
References and notes i For a comparison of different retirement systems see lsquoPensions at a Glance 2011rsquo OECD 2011 ii As the survey was carried out online the survey results in China are based toward people living in urban areas iii ldquoPensions Marketsrdquo TheCityUK March 2013 p9 iv Global Employment Trends for Youth 2013 A generation at risk International Labour Organisation 2013 p2 v Eurostat July 2013 vi OECD Employment and Labour Markets Key Tables from OECD No 2 2012 vii The Federal Reserve Bank of New York 2012 Quarterly Report on Household Debt March 29 2013 viii World Bank ix lsquoWorld-class povertyrsquo The Economist February 27 2013
httpwwweconomistcomblogsanalects201302chinas-poor x lsquoThe Chinese slow down in char tsrsquo The Economist July 15 2013 xi lsquoChina rsquos welfare system difficult inflexible and blatantly unfairrsquo The Guardian April 23 2013
httpwwwtheguardiancomglobal-development2013apr23china-welfare-system-inflexible-unfair xii lsquo The Dutch experience with Defined Ambition pensions and the impact on companiesrsquo Aegon Global Pensions March 12 2013
httpwwwaegonglobalpensionscomenHomePublicationsNews-archiveNewsThe-Dutch-experience-with-Defined
Ambition-pensions-and-what-that-may-mean-for-companies-in-the-Netherlands-and-the-UK
shy
The Young Pragmatic and Penniless Generation | 34
Contact information HE ADQUARTER S
Aegon NV
PO Box 85
2501 CB The Hague
Telephone +31 70 344 32 10
w w waegoncom
MEDIA REL ATIONS
Telephone +31 70 344 89 56
Email gcc-iraegoncom
Countr y Index score
Germany 548
China 541
Canada 524
United States 519
The Netherlands 488
United Kingdom 486
Sweden 483
France 475
Hungar y 473
Poland 463
Spain 440
Japan 430
Total 489
Appendix 1 Aegon Retirement Readiness Index (ARRI) - technical note
Aegon Retirement Readiness Index (ARRI)-technical note 2013 Weightings (2012 in brackets) A sample of 12000 pre and post retirees was drawn from 1 Personal responsibilit y 20 (30)
twelve countries Of these 10800 (90) were pre-retirees 2 Level of awareness 30 (35)
and these were chosen for fur ther analysis of their plans 3 Financial capability Understanding 30 (25)
for retirement The Index that was developed forms an 4 Retirement planning 50 (50)
assessment of how well an individual perceives the adequacy 5 Financial preparedness 60 (60)
of his her own finances and financial awareness specifically 6 Income replacement 35 (35)
for addressing his retirement needs
Note that the weights devised to show the relative
The lsquotargetrsquo for the Index impor tance of each question in calculating the Index add to
The question on current savings activity was designated as the 225 These were then re-scaled so that a final scale of 1 to
target question (dependent variable) for predicting the level of 10 was calculated
preparedness for retirement Responses to this question were
then correlated with each of the six key questions (variables) Final scores by country below to understand which were driving the activity These weightings were multiplied by the actual scores for each
This was done because it was not felt to be correct to give respondent for each of the six Index questions and aggregated
each of the six variables described below an equal weight as to obtain a provisional score This was then adjusted to
they appeared to have quite different relationships to the give countr y scores out of 1 to 10 (A score of 1 to 10 had
target question sufficient differentiation to be used as the scale for analysis)
1 Personal responsibilit y for income in retirement
2 Level of awareness of need to plan for retirement
3 F inancial capability Understanding of financial matters
regarding plans for retirement
4 Retirement planning Level of development of plans
5 Financial preparedness for retirement
6 Income replacement Level of projected income replacement
The weighting To estimate the statistical significance of the decline in overall
scores in this yearrsquos Index is theoretically incalculable
Two things have changed from 2012 to 2013
1 C anada and China have joined the sample
2 The new countries have thus influenced the weights of
emphasis placed on the 6 variables used to calculate
the score hence the weights attached to the complex
calculation have changed
However it is noticeable that for countries which were sampled
in both time periods the mean scores for the six individual
variables have almost invariably declined and on average more
than half of them have shown a significant level of decline
In particular the question lsquoDo you think you will achieve this
incomersquo has for all countries shown a significant level of
decline We thus hypothesize that the comparative results
show a significant decline
The Young Pragmatic and Penniless Generation | 36
Net
herl
ands
Net
herl
ands
Net
herl
ands
Ger
man
yG
erm
any
Ger
man
yBase 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
Better off 7 4 23 Sw
eden
Swed
en11 5 7 8 3 11 14 50 5
Swed
en
About the same 19 18 27 23 8 19 18 13 29 29 24 21 U
ntie
dU
ntie
dU
nite
d Worse off 66 74 41 58 79 69 71 76 51 47 21 55
Kin
gdom
Kin
gdom
Kin
gdom
Donrsquot know 9 3 9 9 9 4 4 8 9 10 6 19
Fran
ceFr
ance
Fran
ce
Chart 2 Education of 20 ndash 29 year olds by country Q Please choose from the following list the highest level of educational or professional qualification you have
Spai
nSp
ain
Spa
in
Pol
and
Pol
and
Pol
and
Hun
gary
Hun
gary
Hun
gar y
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
dU
nite
d 100 100 100 100 100 100 100 100 100
Stat
es100 100 100
Stat
esSt
ates
Less than high school graduate 2 44 6 14 1 3 2 7 1 3 Ca
nada
Cana
daC
anad
aHigh school graduate 11 33 53 23 22 22 4 41 14 21 1 2
Some college or trade school 46 2 9 9 9 19 37 14 28 20 4 33 Ch
ina
Chin
aC
hina
College degree University degree 31 15 27 30 41 43 21 33 50 46 9 57
Postgraduate degree or 8 3 3 23 25 11 36 1 8 9 80 6 qualification Ja
pan
Japa
n Ja
pan
Other 2 4 1 1 1 2 0 5 0 6 2
None 0 1 1 0 1 0 0
NET Less than undergrad degree 61 82 70 47 34 46 43 66 42 45 11 37
NET Undergrad degree or higher 39 18 30 53 66 54 57 34 58 55 89 63
Chart 3 Aegon Retirement Readiness Index scores for young employees by country
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
NET Low Index (0-5) 80 64 79 81 85 78 81 73 65 61 61 87
NET Medium Index (6-7) 15 30 18 15 14 21 17 23 25 31 31 12
NET High Index (8-10) 4 6 3 3 1 2 2 4 10 8 7 1
Appendix 2 Country comparisons Chart 1 The majority of young employees believe that they will be worse off in retirement compared to their parents Q Do you think that future generations of retirees will be better off or worse off than those currently in retirement
37 | The Young Pragmatic and Penniless Generation
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsI always make sure that 27 34 27 26 17 14 19 22 35 33 32 20 I am saving for retirement
I only save for retirement G
erm
any
Ger
man
y21 27 20 13 17 21 16 6 17 24 20 24 occasionally from time to time
I am not saving for retirement now 6 11 8 11 5 15 9 4 10 8 9 5 although I have in the past Sw
eden
Swed
en
I am not saving for retirement 35 23 34 46 53 40 49 54 36 33 38 46 though I do intend to U
nite
dU
ntie
dK
ingd
omK
ingd
om I have never saved for retirement and 11 6 10 5 8 10 6 13 3 2 1 6 donrsquot intend to
Fran
ceFr
ance
Chart 5 Younger people are more likely not to be using any means of retirement savings Sp
ain
Spai
nQ Which financial means if any are you currently using to prepare for your retirement
Pol
and
Pol
and
only asked in Germany only asked in Spain
Hun
gary
Hun
gary
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
dSt
ates
Stat
es100 100 100 100 100 100 100 100 100 100 100 100
Defined benefit plan 16 10 25 29 15 3 76 11 20 13 5 Ca
nada
Cana
daDefined contribution plan 28 10 17 19 19 14 10 23 40 7 3
Private pension 8 18 14 10 5 9 4 13 12 40 66 4 Ch
ina
Chin
a Government pension social security 12 43 14 21 8 7 4 18 27 33 71 35
Stocks 5 12 14 7 4 17 7 2 13 10 23 9
Bonds 1 8 5 6 2 16 4 2 8 13 14 3 Ja
pan
Japa
n
Mutual funds 2 14 23 4 2 10 3 4 7 16 9 6
Investment insurances (annuities) 2 3 2 3 2 9 4 5 2 4 6 1
Savings accounts 23 37 38 25 23 6 29 15 36 37 65 36
Investment property 2 10 6 7 9 2 5 2 5 11 18 1
Employee stock purchase 1 1 1 4 1 29 0 4 1 7 1
My home 10 5 8 7 7 8 4 6 6 14 30 1
Reverse mortgage 1 4 2 4
My business 2 1 3 2 2 4 1 1 2 4 12 1
Inheritance 3 11 7 11 7 9 9 8 7 9 6 2
Annuities 1 15 2 2 1 4 3 2 1 2 8
Long-term care insurance 2 1 3 2 9 5 1 6 4 7 1
Life insurance 6 11 8 8 14 3 18 15 19 18 36 17
Unterstuumltzungskasse aus 2 Eigenmitteln finanziert
Unterstuumltzungskasse vom 2 Arbeitgeber finanziert
Chart 4 Younger employees are much more likely to aspire to save for retirement Which of the following best explains your approach to saving for retirement This can include money you contribute to any long-term
investment including pensions stocks and shares investment-linked insurances property etc
Q
The Young Pragmatic and Penniless Generation | 38
Plan de empleo mixto 2 (combinacioacuten de las dos anteriores)
Other 1 6 4 0 1 2 2 3 2 2 3 3
None nothing 8 14 12 23 25 31 6 27 21 17 3 24
Donrsquot know 29 6 17 13 19 8 4 9 7 7 0 9
hart 6 The younger generation has more negative associations of retirement Which if any of the following words do you most associate with retirement
Net
herl
ands
Net
herl
ands
Ger
man
yG
erm
any
Swed
enSw
eden
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
d100 100 100 100 100 100 100 100 100 100 100 100
Kin
gdom
Kin
gdom
Freedom 35 32 36 39 19 26 11 20 35 40 37 33
Opportunity 7 27 25 18 4 8 9 10 17 16 9 16 Fr
ance
Fran
ceLeisure 58 48 36 41 23 24 43 32 50 50 55 6
Excitement 2 5 3 8 2 6 1 2 17 17 4 3 Sp
ain
Spai
nPoverty 11 26 23 11 26 14 37 44 7 5 6 20
Insecurity 34 24 18 16 20 18 35 56 10 9 18 44 P
olan
dP
olan
dLoneliness 4 10 17 16 12 7 11 8 5 9 20 12
Ill health 2 19 7 14 15 9 49 23 6 6 29 11 H
unga
ryH
unga
ryDependent on others 11 11 5 18 14 8 18 19 14 6 11 4
Tired 3 4 8 10 14 10 17 6 7 7 13 19 U
nite
dU
nite
dFar away 38 19 25 21 61 32 2 13 33
Stat
es33 14 22
Stat
es
Boredom 14 16 6 12 16 12 15 8 12 12 16 17 Ca
nada
Cana
daEnjoyment 21 16 17 23 14 29 5 3 37 37 35 15
None of the above 0 1 1 2 0 2 1 1 2 2 1 2
Donrsquot know 2 2 3 3 2 2 1 2 0 Ch
ina
6 Ch
ina
hart 7 Many young employees think they are not on course to achieve target retirement income Ja
pan
Japa
n Do you think you will achieve this income [your estimated income needed in retirement]
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
I donrsquot know if I am on course to 56 37 57 59 50 39 49 48 48 41 22 68 achieve my retirement income
No I am on course to achieve around one-quarter (25) of my 10 14 9 13 15 14 14 13 10 10 10 7 retirement income
No I am on course to achieve around 12 20 14 11 19 19 18 15 12 11 23 12 half of my retirement income
No I am on course to achieve around three-quarters (75) of my 8 14 7 4 8 15 9 8 6 11 20 5 retirement income
Yes I am on course to achieve my 15 15 13 14 8 13 11 17 25 27 25 8 retirement income
CQ
CQ
39 | The Young Pragmatic and Penniless Generation
Chart 8 Young people in most countries expect to retire before 65 Q At what age do you expect to retire from all paid employment
Net
herl
ands
Ger
man
y
Swed
en
Uni
ted
Kin
gdom
Fran
ce
Spai
n
Pol
and
Hun
gary
Uni
ted
Stat
es
Cana
da
Chin
a
Japa
n
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
40 or under 0 1 1 0 0 1 3 1 5 12
41-50 1 2 3 5 2 2 6 3 9 4 37 9
51-59 4 4 4 6 2 4 11 5 7 10 30 1
60 5 11 8 12 10 13 19 12 12 16 21 27
61-64 2 11 10 2 20 7 4 13 5 3 1 2
65 17 22 44 31 34 32 16 26 26 32 3 25
66-69 42 32 15 9 12 29 20 13 9 9 0 1
70 19 11 10 18 10 5 10 9 13 12 0 6
71+ 5 5 5 9 4 5 5 3 7 5 1 4
Never 2 1 1 2 2 2 6 4 1 0 0
Donrsquot know 2 3 2 5 3 2 8 9 5 5 1 13
Mean 67 65 65 65 64 65 63 64 63 64 53 59
Median 67 65 65 65 65 65 65 65 65 65 55 60
Chart 9 Younger employees feel they donrsquot have money to invest for retirement Q What is the single biggest obstacle to you saving for retirement right now
Net
herl
ands
Ger
man
y
Swed
en
Uni
ted
Kin
gdom
Fran
ce
Spai
n
Pol
and
Hun
gary
Uni
ted
Stat
es
Cana
da
Chin
a
Japa
n
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
The uncertain economic environment 19 8 13 9 13 19 11 14 12 9 29 27
Lack of money to invest 28 41 33 43 47 34 48 55 47 50 6 19
Fear of poor investment returns over the coming years 2 5 10 7 5 6 8 2 6 8 14 6
Complexity of investment products 4 4 4 3 5 3 5 2 12 5
I donrsquot know how to go about investing for the long-term 2 3 10 8 5 5 3 3 6 8 7 9
The fees charged by financial services companies 2 4 4 2 4 3 4 2 3 5 2 5
I canrsquot afford to take financial advice 3 3 6 8 2 4 3 5 3 2 3 2
I donrsquot trust the financial services industry 12 11 8 6 5 10 6 2 2 3 5 4
I donrsquot see the need to save for the long-term 6 1 2 2 3 3 3 1 2 1 4 3
Concerns about unstable currencies currency fluctuations 2 5 1 3 3 3 4 3 4 5 15 2
Other (PLEASE STATE) 3 3 1 1 3 2 4 6 2 2 1
Donrsquot know 17 12 11 7 8 6 3 6 8 6 3 17
The Young Pragmatic and Penniless Generation | 40
Chart 10 More money would incentivize young employees to save for retirement Q Which if any of the following would encourage you to save for retirement
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsMore generous tax breaks on long-term savings and pensions 20 44 30 32 27 23 42 42 33 43 40 32 products
Ger
man
yG
erm
any
Access to financial education so that I am more aware of what 24 6 14 21 16 22 21 12 23 24 43 25 I need to do for myself
Swed
enSw
eden
Access to professional financial advice so that I have personalized
Uni
ted
20 24 23 23 15 21 25 9 22 23 44 13 U
nite
drecommendations on what steps
Kin
gdom
Kin
gdom
I need to take
Simpler investment products that 12 33 19 28 20 Fr
ance
18 27 16 32 28 36 10 Fr
ance
I can understand with less jargon
Better and more frequent information about my retirement 16 28 20 27 27 23
Spai
n20 18 25 31 45 22
Spai
nsavings
Better legal protection in case I am 12 18 13 18 10 24 18 13 13 19 21 6 P
olan
dP
olan
dsold the wrong product
A pay rise 46 54 44 64 55 50 70 72 67 64 53 37
A better retirement plan pension H
unga
ryH
unga
ry27 32 25 33 29 26 42 35 39 44 33 32 match from my employer
Other 4 2 1 1 2 2 3 3 2 U
nite
d3 0
Uni
ted
Stat
esSt
ates
Donrsquot know 17 9 16 10 10 12 3 8 8 5 3 17
Not applicable - I already have 3 3 4 2 2 1 1 1 2 2 3 sufficient savings Ca
nada
Cana
da
Chin
aCh
ina
Chart 11 A majority of younger employees do not have a written plan for retirement Q Which of the following best describes your retirement planning strategy
Japa
n Ja
pan
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
I have a written plan 7 18 10 9 6 8 6 5 13 10 8 4
I have a plan but it is not written 24 47 37 25 23 31 29 31 37 44 55 24
down
I do not have a plan 61 32 51 61 62 55 62 58 45 42 34 61
Donrsquot know 7 3 3 5 8 6 3 6 4 4 3 12
41 | The Young Pragmatic and Penniless Generation
Chart 12 For young employees friends and family are the leading source of retirement savings information Q And which of these sources (of information) is most important to you
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
Bank adviser 6 11 19 5 25 5 7 4 3 17 10 2 N
ethe
rlan
dsN
ethe
rlan
dsProfessional financial adviser 12 22 10 12 10 19 19 22 21 25 19 10
Insurance agent spokesperson 3 10 2 3 1 3 6 2 3 0 3 2 G
erm
any
Ger
man
yInsurance company website 3 1 3 2 4 4 2 2 1 3 1
Personal finance websites online 8 5 7 8 5 4 10 8 12 6 10 8 retirement planning tools Sw
eden
Swed
enPersonal finance media 2 2 2 2 2 6 3 1 2 1 6 2
Government website 7 1 3 6 U
nite
d5 2 3 3 2 3 7 1
Uni
ted
Kin
gdom
Kin
gdom
Bank website 2 3 3 2 1 0 3 2 1 6 3 3
My employer 12 8 4 9 4 7 5 12 8 5 4 1 Fr
ance
Fran
ceAccountant 2 6 4 4 1 3 1 3 5 5 1 3
Lawyer 2 3 1 2 2 8 4 2 1 2 2 0 Sp
ain
Spai
nFriends and family 21 22 30 28 24 26 18 24 26 20 25 24
None of these P
olan
dP
olan
dNot applicable 21 7 16 18 19 13 17 15 14 9 5 41
Hun
gary
Hun
gary
Chart 13 Most young workers feel their employer should provide some kind of pension Q In the future what if anything should employers do to help people plan for retirement
Uni
ted
Uni
ted
Stat
esSt
ates
Cana
daCa
nada
Chin
aCh
ina
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 Ja
pan
Japa
n Employers should be required to 24 43 20 40 21 26 20 28 37 34 20 30 contribute to workersrsquo pensions
Employers should be required to make a pension available but not to 12 13 7 17 20 15 15 4 11 14 22 5 contribute into it
Employers should not be required to provide pensions but should 15 9 12 8 9 8 11 6 11 9 9 11 provide information on how to plan for retirement
Employers should provide a range of flexible benefits and 13 18 18 16 15 27 25 28 21 22 45 12 allow individuals to choose which benefits they actually want
Nothing ndash it should be left to individual employees to take care 2 2 5 1 4 3 3 5 6 5 1 9 of themselves
Nothing ndash it should be left to the government to take care of its 2 5 5 2 5 8 15 14 1 4 0 4 citizens
Donrsquot know 30 10 32 17 27 12 12 15 13 13 3 29
The Young Pragmatic and Penniless Generation | 42
Chart 14 Workplace pensions are relatively low down in young workersrsquo priorities when choosing a job Q How important to you would the following workplace benefits be if you were choosing your next job
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsBasic salary 86 93 88 91 88 92 90 94 90 93 96 94
Holiday entitlement 87 94 89 91 92 94 91 94 93 94 96 91 G
erm
any
Ger
man
yOvertime and bonus pay 86 93 87 88 89 90 89 94 90 91 97 90
Location of workplace 88 91 86 92 89 90 89 92 93 93 92 86 Sw
eden
Swed
enMedical health insurance 73 92 84 65 86 87 88 87 93 94 98 83
Opportunities for career progression 86 91 81 90 90 94 91 94 92 91 96 81 U
nite
dU
nite
dAccess to a workplace retirement 85 85 81 82
Kin
gdom
78 84 80 78 84 86 93 74 K
ingd
omplan with employer contributions
Access to good training provision 85 87 85 88 86 91 85 93 86 90 95 74 Fr
ance
Fran
ceFlexible working hours 79 87 58 86 81 89 81 87 91 91 92 57
Life insurance 72 75 79 69 80 82 Sp
ain
84 80 81 88 93 74 Sp
ain
(death in service benefits)
Phased retirement or other employer programs providing for 74 54 75 71 72 81 76 74 76 81 91 65
Pol
and
Pol
and
a transition into retirement
Ability to work past the normal 68 57 64 65 64 74 72 65 74 76 80 70 retirement age H
unga
ryH
unga
ry
Access to a workplace retirement 62 74 61 68 59 77 61 47 68 74 89 65 plan without employer contributions U
nite
dU
nite
dSt
ates
Stat
esEmployee share plans 50 72 54 65 59 73 61 51 64 73 91 55
Access to creche help with the 67 75 64 56 69 79 75 83 58 69 89 68 cost of childcare Ca
nada
Cana
da
Opportunities for foreign travel 53 54 60 55 50 71 58 66 57 61 79 37
Company car 51 46 45 47 49 63 51 49 36 49 69 Ch
ina
39 Ch
ina
Japa
n Ja
pan
Chart 15 Young workers think the state pension will need to be reformed Q With the cost of government pensions becoming a greater concern as people live longer which if any of the following do you think
the government should undertake
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
The government should reduce the overall cost of state pension 15 33 16 15 16 20 28 22 21 26 30 16 provision by reducing the value of individual pension plans
The government should increase overall funding available for the 12 21 30 22 14 34 19 26 21 18 29 10 state pension through raising taxes
43 | The Young Pragmatic and Penniless Generation
he government should take a alanced approach with some 27 26 12 30 28 23 24 16 34 31 38 41 eductions in individual payments nd some increases in tax
he government should not do nything State pension provision 7 2 12 5 3 4 3 3 5 4 0 5 ill remain perfectly affordable in he future
onrsquot know 38 19 29 29 39 20 26 34 19 21 4 28
Net
herl
ands
art 16 Products which protect against investment risk are the most important to young workers ( interested) Thinking about the types of financial products you could purchase to help provide you with security in retirement on a scale of 1 to 5
how interested are you in the following options G
erm
any
Swed
en
Uni
ted
Kin
gdom
ase 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 Fr
ance
100 100 100 100 100 100 100 100 100 100 100 100
product providing a guaranteed etirement income stream or 75 81 73 76 74 83 78 76 87 85 94 69
Spai
nifetime income in retirement
product which protects my 74 79 73 76 72 82 77 74 84 86 94 65 etirement income against inflation P
olan
d
product which guarantees that I 72 82 73 78 75 81 76 73 86 86 90 67 onrsquot lose my initial investment H
unga
ry product which helps meet the ost of long-term care if I become 74 79 74 77 70 79 76 71 86 85 84 66
Uni
ted
nable to look after myself St
ates
product which protects my capital 71 81 71 76 68 76 77 73 84 83 93 65 rom poor investment returns Ca
nada
product which generates a etirement income and allows 69 78 71 75 68 81 77 72 84 86 94 70 e to take a lump sum from the
Chin
anvestment should I need to
product where the annual 66 78 68 75 72 79 77 70 85 86 87 64 anagement charges are kept low Ja
pan
product which enables me to eep some control over how my 71 73 70 75 72 80 75 69 88 85 91 63 avings are invested during my etirement
product which manages the sset allocation so that I am never 68 70 67 73 66 76 71 67 80 83 95 60 xposed to a level of risk Irsquom not omfortable with
product which continues to rovide a retirement income to my 74 78 71 75 73 81 79 73 86 82 94 60 pouse in the event that I die first
product which protects my family gainst having to pay estate taxes 73 76 71 74 75 81 75 69 82 82 89 56 hen I die
product which locks in investment 72 71 63 73 64 71 59 56 81 84 89 61 eturns during the good years
Tbra
Tawt
D
ChQ
B
Arl
Ar
Ad
Acu
Af
Armi
Am
Aksr
Aaec
Aps
Aaw
Ar
The Young Pragmatic and Penniless Generation | 44
Individuals Employers and governments
Determine how much income you need in retirement Auto-enroll employees into a workplace retirement plan Young people accept the need to save for retirement but donrsquot If an auto-enrollment workplace retirement plan is feasible
know how to act on that need They can become more retirement this can play a major role in getting young workers saving early
savvy simply by talking to friends and family (as do 24 of and regularly Combined with auto-escalation (the automatic
our respondents already) or employers going online to use annual increase in retirement plan contributions) and matching
retirement calculators or reading the personal finance media contributions it can lead to greater retirement readiness
Seek out a financial advisor Provide more flexible savings products through the workplace Young people are faced with life events that make it easy to Not all savings journeys start with a retirement plan particularly
feel overwhelmed by financial priorities in addition to retirement for young people who may think of retirement as lsquotoo far awayrsquo
planning Soliciting advice from a finance professional early in Employers can kick-start the savings habit in younger workers
life (17 of young employees have done so already) helps with by providing flexible easy to access and easy to understand
planning and priorities and making sense of long-term finances savings plans as a more attractive starter option
Start saving now and save consistently Make company retirement plans more portable As with all employees young people will strengthen their Young people move jobs much more often than previous
retirement readiness simply by saving regularly Today only 25 generations of employees so savings like DC retirement plans
of young people always save yet even small regular amounts need to follow employees when they change jobs
will improve retirement readiness over time
Make tax incentives more effective Ask your employer about workplace retirement savings plans All countries encourage long-term savings through tax relief but
and other retirement benefits young people often arenrsquot aware of this or donrsquot understand it
While one third (33) of young people believe that a workplace A more targeted system of tax relief could help provide clearer
retirement savings plan provides a major opportunity to start and simpler signals to younger people about the financial
saving employers often experience difficulties in engaging benefits of long-term saving
younger employees in discussions about retirement planning
The workplace is an important channel for achieving retirement Make better financial education central to the workplace readiness so be sure to max out on any employer contributions retirement offer
Young people who aspire to save may be prevented from
doing so by setting the wrong financial priorities Workplace
retirement education ndash alongside professional advice ndash can help
guide young people toward the right long-term priorities at an
earlier age in life
The Young Pragmatic and Penniless Generation | 28
29 | The Young Pragmatic and Penniless Generation
Glossary
Aegon Retirement Readiness Index (ARRI) c areer average retirement plan The ARRI assesses the relative levels of retirement A type of defined benefit plan that is based on an
preparedness of employees across different countries on a employeersquos average retirement earnings over the duration
scale from 1 to 10 The Index is based on three questions of plan membership Same as average salary plan
covering attitudes and three questions covering behaviors
defined ambition (DA) plan average salary plan A type of retirement plan in which retirement plan risks
A type of defined benefit plan that is based on an are shared between the employer and the employee
employeersquos average retirement earnings over the duration It offers greater certainty to savers around the final value
of plan membership Same as career average plan of their retirement assets than in DC plans and less
cost volatility for employers than with DB plans In the
a nnuity Netherlands Defined Ambition (DA) retirement plans are
A form of contract sold by life insurance companies that being introduced in order to help relieve the pressure on
guarantees a fixed or variable payment to the annuitant employers while still trying to provide employees with a
at some future time usually retirement All capital in the more secure retirement plan The United Kingdom too is
annuity grows tax-deferred looking at DA retirement plans as a solution
auto enrollment defined benefit (DB) plan An employer-sponsored retirement plan in which the An employer-sponsored retirement plan where the amount
employer is able to enroll an employee without that of future benefits an employee will receive from the plan is
employeersquos express authorization The employer determines defined typically by a formula based on salary history and
what percentage of the employeersquos salary or wages is years of service The amount of contributions the employer
contributed to the plan The employee is able to change is required to make will depend on the investment returns
this percentage and can opt out of enrollment in the plan experienced by the plan and the benefits promised
Contrast defined contribution plan
a uto-escalation A feature of a plan which automatically increases the defined contribution (DC) plan percentage of (retirement) funds saved from salary An employer-sponsored retirement plan such as a 401(k)
This feature generally uses a default or standard plan or a 403(b) plan in the United States in which
contribution escalation rate contributions are made to individual participant accounts
Depending on the type of DC plan contributions may be
B aby Boomers made by the employee the employer or both
A term used to refer to people generally born between
the end of World War II in 1945 and the mid 1960s The employeersquos benefits at retirement or termination of
Other generations Silent Generation - the generation born employment are based on the employee and employer
between 1925 and 1945 Generation X - the generation contributions and earnings and losses on those
born between 1965 and 1979 Millennials or Generation contributions See also 401(k) and 403(b) plan
Y - the generation born between 1980 and 2000 and often Contrast defined benefit plan
classified as the children of Baby Boomers
The Young Pragmatic and Penniless Generation | 30
401(k) plan An employer sponsored retirement plan that enables
employees to make tax-deferred contributions from their
salaries to the plan
403(b) plan An employer-sponsored defined contribution plan that
enables employees of universities public schools and
non-profit organizations to make tax-deferred contributions
from their salaries to the plan
final salary plan A type of defined benefit plan in which retirement
benefits are based on final retirement salary in the years
immediately before retirement benefits are received
Millennials A term used to refer to the people born from about 1980
to 2000 brought up using digital technology They are
often classified as the children of Baby Boomers
r etirement (or pension) plan Provides replacement for salary when a person is no
longer working due to retirement In the case of a defined
benefit retirement plan the employer or union contributes
to the plan which pays a predetermined benefit for the
rest of the employeersquos life based on length of service and
salary Payments may be made either directly or through
an annuity Retirement plan payments are taxable income
to recipients in the year received The employer or union
has fiduciary responsibility to invest the retirement plan
funds in stocks bonds real estate and other assets earn
a satisfactory rate of return and make payments to retired
workers Retirement plan funds holding trillions of dollars
are one of the largest investment forces in the stock
bond and real estate markets If the employer defaults in
the United States retirement plan payments are usually
guaranteed by the Pension Benefit Guaranty Corporation
(PBGC)
variable annuities (VA) An insurance contract in which the insurance company
guarantees a minimum payment at the end of the
accumulation period The payments may vary depending
on the financial performance of the managed portfolio
31 | The Young Pragmatic and Penniless Generation
About Aegon Transamerica Center for Retirement Studiesreg and Cicero Consulting
Aegon Transamerica Center Aegon is an international life insurance pensions and asset reg management company with businesses in over 20 markets for Retirement Studies in the Americas Europe and Asia Aegon companies employ The Transamerica Center for Retirement Studiesreg (TCRS) is
around 24000 people and serve millions of customers a division of the Transamerica Institute a nonprofit private
worldwide foundation TCRS is dedicated to educating the public on
wwwaegoncom emerging trends surrounding retirement security in the
United States TCRSrsquo research emphasizes employer-sponsored
In 2010 Aegon became a founding member of the Global retirement plans issues faced by small to mid-sized companies
Coalition on Aging which seeks to raise awareness of aging and their employees and the implications of legislative and
issues among policymakers and the general public A major aim regulatory changes Transamerica Institute is funded by
of the coalition is to transform the way we think and speak contributions from Transamerica Life Insurance Company and
about aging replacing the familiar rhetoric of lsquoproblemsrsquo with its affiliates and may receive funds from unaffiliated third-
a more positive discussion of lsquopossibilitiesrsquo and lsquoopportunitiesrsquo parties For more information about TCRS please refer to
wwwglobalcoalitiononagingcom wwwtransamericacenterorg
Cicero Consulting A leading consultancy firm serving the banking insurance and
asset management sector Cicero specializes in public policy
and communications consulting as well as global thought
leadership and independent market research Cicero was
established in 2001 and now operates from offices in London
Brussels Washington and Singapore As a market leader in
pensions and retirement research Cicero designed
and analyzed the research and contributed to the report
wwwcicero-groupcom
The Young Pragmatic and Penniless Generation | 32
Marta acebo Mark Green Patricia Plas
Paula alvarez douGlas henck scott roane
Frits bart wendel hoFMan thurstan robinson
Grace basile
lynette belFry
andrew berwick
Frans van der horst
tatsuo kai
herMan kaPPelle
Patti rowey
sarah russell
Joost van schaGen
robin boon Gaacutebor kePecs dick schiethart
bert-JaaP brons Marco keiM erik schouten
douG brooks
libby buet
kent callahan
JaiMe kirkPatrick
bas knol
roGer koch
anGela seyMour Jackson
kate sMith
renske stoker
Jeanne de cervens
dana chen
Peter kunkel
alexander kuiPers
eyleen sun
MartiJn tans
arkadiusz chMurzynski
heidi cho
brian lewis
Mike linder
GreG tucker
Mark twiGG
siMon clow siMon luke catherine wanG
robert colliGnon Jason Ma Marc van weede
catherine collinson GrzeGorz Mathea tiM willaert
wendy daniels
Michel denizot
edit drevenka
Paul Middleton
takaoh MiyaGawa
david Moulton
daniel wriGht
alex wynaendts
MacieJ zaPala
Jan driessen
kelly Fu
adrian Grace
Mark Mullin
Marcelle noltenius
stiG nybo
Peacuteter zatykoacute
vicky zeldin
Disclaimer This repor t contains general information only and does
not constitute a solicitation or offer No rights can be
derived from this repor t Aegon its par tners and any of
their affiliates or employees do not guarantee warrant
or represent the accuracy or completeness of the
information contained in the repor t
Acknowledgements
33 | The Young Pragmatic and Penniless Generation
References and notes i For a comparison of different retirement systems see lsquoPensions at a Glance 2011rsquo OECD 2011 ii As the survey was carried out online the survey results in China are based toward people living in urban areas iii ldquoPensions Marketsrdquo TheCityUK March 2013 p9 iv Global Employment Trends for Youth 2013 A generation at risk International Labour Organisation 2013 p2 v Eurostat July 2013 vi OECD Employment and Labour Markets Key Tables from OECD No 2 2012 vii The Federal Reserve Bank of New York 2012 Quarterly Report on Household Debt March 29 2013 viii World Bank ix lsquoWorld-class povertyrsquo The Economist February 27 2013
httpwwweconomistcomblogsanalects201302chinas-poor x lsquoThe Chinese slow down in char tsrsquo The Economist July 15 2013 xi lsquoChina rsquos welfare system difficult inflexible and blatantly unfairrsquo The Guardian April 23 2013
httpwwwtheguardiancomglobal-development2013apr23china-welfare-system-inflexible-unfair xii lsquo The Dutch experience with Defined Ambition pensions and the impact on companiesrsquo Aegon Global Pensions March 12 2013
httpwwwaegonglobalpensionscomenHomePublicationsNews-archiveNewsThe-Dutch-experience-with-Defined
Ambition-pensions-and-what-that-may-mean-for-companies-in-the-Netherlands-and-the-UK
shy
The Young Pragmatic and Penniless Generation | 34
Contact information HE ADQUARTER S
Aegon NV
PO Box 85
2501 CB The Hague
Telephone +31 70 344 32 10
w w waegoncom
MEDIA REL ATIONS
Telephone +31 70 344 89 56
Email gcc-iraegoncom
Countr y Index score
Germany 548
China 541
Canada 524
United States 519
The Netherlands 488
United Kingdom 486
Sweden 483
France 475
Hungar y 473
Poland 463
Spain 440
Japan 430
Total 489
Appendix 1 Aegon Retirement Readiness Index (ARRI) - technical note
Aegon Retirement Readiness Index (ARRI)-technical note 2013 Weightings (2012 in brackets) A sample of 12000 pre and post retirees was drawn from 1 Personal responsibilit y 20 (30)
twelve countries Of these 10800 (90) were pre-retirees 2 Level of awareness 30 (35)
and these were chosen for fur ther analysis of their plans 3 Financial capability Understanding 30 (25)
for retirement The Index that was developed forms an 4 Retirement planning 50 (50)
assessment of how well an individual perceives the adequacy 5 Financial preparedness 60 (60)
of his her own finances and financial awareness specifically 6 Income replacement 35 (35)
for addressing his retirement needs
Note that the weights devised to show the relative
The lsquotargetrsquo for the Index impor tance of each question in calculating the Index add to
The question on current savings activity was designated as the 225 These were then re-scaled so that a final scale of 1 to
target question (dependent variable) for predicting the level of 10 was calculated
preparedness for retirement Responses to this question were
then correlated with each of the six key questions (variables) Final scores by country below to understand which were driving the activity These weightings were multiplied by the actual scores for each
This was done because it was not felt to be correct to give respondent for each of the six Index questions and aggregated
each of the six variables described below an equal weight as to obtain a provisional score This was then adjusted to
they appeared to have quite different relationships to the give countr y scores out of 1 to 10 (A score of 1 to 10 had
target question sufficient differentiation to be used as the scale for analysis)
1 Personal responsibilit y for income in retirement
2 Level of awareness of need to plan for retirement
3 F inancial capability Understanding of financial matters
regarding plans for retirement
4 Retirement planning Level of development of plans
5 Financial preparedness for retirement
6 Income replacement Level of projected income replacement
The weighting To estimate the statistical significance of the decline in overall
scores in this yearrsquos Index is theoretically incalculable
Two things have changed from 2012 to 2013
1 C anada and China have joined the sample
2 The new countries have thus influenced the weights of
emphasis placed on the 6 variables used to calculate
the score hence the weights attached to the complex
calculation have changed
However it is noticeable that for countries which were sampled
in both time periods the mean scores for the six individual
variables have almost invariably declined and on average more
than half of them have shown a significant level of decline
In particular the question lsquoDo you think you will achieve this
incomersquo has for all countries shown a significant level of
decline We thus hypothesize that the comparative results
show a significant decline
The Young Pragmatic and Penniless Generation | 36
Net
herl
ands
Net
herl
ands
Net
herl
ands
Ger
man
yG
erm
any
Ger
man
yBase 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
Better off 7 4 23 Sw
eden
Swed
en11 5 7 8 3 11 14 50 5
Swed
en
About the same 19 18 27 23 8 19 18 13 29 29 24 21 U
ntie
dU
ntie
dU
nite
d Worse off 66 74 41 58 79 69 71 76 51 47 21 55
Kin
gdom
Kin
gdom
Kin
gdom
Donrsquot know 9 3 9 9 9 4 4 8 9 10 6 19
Fran
ceFr
ance
Fran
ce
Chart 2 Education of 20 ndash 29 year olds by country Q Please choose from the following list the highest level of educational or professional qualification you have
Spai
nSp
ain
Spa
in
Pol
and
Pol
and
Pol
and
Hun
gary
Hun
gary
Hun
gar y
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
dU
nite
d 100 100 100 100 100 100 100 100 100
Stat
es100 100 100
Stat
esSt
ates
Less than high school graduate 2 44 6 14 1 3 2 7 1 3 Ca
nada
Cana
daC
anad
aHigh school graduate 11 33 53 23 22 22 4 41 14 21 1 2
Some college or trade school 46 2 9 9 9 19 37 14 28 20 4 33 Ch
ina
Chin
aC
hina
College degree University degree 31 15 27 30 41 43 21 33 50 46 9 57
Postgraduate degree or 8 3 3 23 25 11 36 1 8 9 80 6 qualification Ja
pan
Japa
n Ja
pan
Other 2 4 1 1 1 2 0 5 0 6 2
None 0 1 1 0 1 0 0
NET Less than undergrad degree 61 82 70 47 34 46 43 66 42 45 11 37
NET Undergrad degree or higher 39 18 30 53 66 54 57 34 58 55 89 63
Chart 3 Aegon Retirement Readiness Index scores for young employees by country
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
NET Low Index (0-5) 80 64 79 81 85 78 81 73 65 61 61 87
NET Medium Index (6-7) 15 30 18 15 14 21 17 23 25 31 31 12
NET High Index (8-10) 4 6 3 3 1 2 2 4 10 8 7 1
Appendix 2 Country comparisons Chart 1 The majority of young employees believe that they will be worse off in retirement compared to their parents Q Do you think that future generations of retirees will be better off or worse off than those currently in retirement
37 | The Young Pragmatic and Penniless Generation
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsI always make sure that 27 34 27 26 17 14 19 22 35 33 32 20 I am saving for retirement
I only save for retirement G
erm
any
Ger
man
y21 27 20 13 17 21 16 6 17 24 20 24 occasionally from time to time
I am not saving for retirement now 6 11 8 11 5 15 9 4 10 8 9 5 although I have in the past Sw
eden
Swed
en
I am not saving for retirement 35 23 34 46 53 40 49 54 36 33 38 46 though I do intend to U
nite
dU
ntie
dK
ingd
omK
ingd
om I have never saved for retirement and 11 6 10 5 8 10 6 13 3 2 1 6 donrsquot intend to
Fran
ceFr
ance
Chart 5 Younger people are more likely not to be using any means of retirement savings Sp
ain
Spai
nQ Which financial means if any are you currently using to prepare for your retirement
Pol
and
Pol
and
only asked in Germany only asked in Spain
Hun
gary
Hun
gary
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
dSt
ates
Stat
es100 100 100 100 100 100 100 100 100 100 100 100
Defined benefit plan 16 10 25 29 15 3 76 11 20 13 5 Ca
nada
Cana
daDefined contribution plan 28 10 17 19 19 14 10 23 40 7 3
Private pension 8 18 14 10 5 9 4 13 12 40 66 4 Ch
ina
Chin
a Government pension social security 12 43 14 21 8 7 4 18 27 33 71 35
Stocks 5 12 14 7 4 17 7 2 13 10 23 9
Bonds 1 8 5 6 2 16 4 2 8 13 14 3 Ja
pan
Japa
n
Mutual funds 2 14 23 4 2 10 3 4 7 16 9 6
Investment insurances (annuities) 2 3 2 3 2 9 4 5 2 4 6 1
Savings accounts 23 37 38 25 23 6 29 15 36 37 65 36
Investment property 2 10 6 7 9 2 5 2 5 11 18 1
Employee stock purchase 1 1 1 4 1 29 0 4 1 7 1
My home 10 5 8 7 7 8 4 6 6 14 30 1
Reverse mortgage 1 4 2 4
My business 2 1 3 2 2 4 1 1 2 4 12 1
Inheritance 3 11 7 11 7 9 9 8 7 9 6 2
Annuities 1 15 2 2 1 4 3 2 1 2 8
Long-term care insurance 2 1 3 2 9 5 1 6 4 7 1
Life insurance 6 11 8 8 14 3 18 15 19 18 36 17
Unterstuumltzungskasse aus 2 Eigenmitteln finanziert
Unterstuumltzungskasse vom 2 Arbeitgeber finanziert
Chart 4 Younger employees are much more likely to aspire to save for retirement Which of the following best explains your approach to saving for retirement This can include money you contribute to any long-term
investment including pensions stocks and shares investment-linked insurances property etc
Q
The Young Pragmatic and Penniless Generation | 38
Plan de empleo mixto 2 (combinacioacuten de las dos anteriores)
Other 1 6 4 0 1 2 2 3 2 2 3 3
None nothing 8 14 12 23 25 31 6 27 21 17 3 24
Donrsquot know 29 6 17 13 19 8 4 9 7 7 0 9
hart 6 The younger generation has more negative associations of retirement Which if any of the following words do you most associate with retirement
Net
herl
ands
Net
herl
ands
Ger
man
yG
erm
any
Swed
enSw
eden
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
d100 100 100 100 100 100 100 100 100 100 100 100
Kin
gdom
Kin
gdom
Freedom 35 32 36 39 19 26 11 20 35 40 37 33
Opportunity 7 27 25 18 4 8 9 10 17 16 9 16 Fr
ance
Fran
ceLeisure 58 48 36 41 23 24 43 32 50 50 55 6
Excitement 2 5 3 8 2 6 1 2 17 17 4 3 Sp
ain
Spai
nPoverty 11 26 23 11 26 14 37 44 7 5 6 20
Insecurity 34 24 18 16 20 18 35 56 10 9 18 44 P
olan
dP
olan
dLoneliness 4 10 17 16 12 7 11 8 5 9 20 12
Ill health 2 19 7 14 15 9 49 23 6 6 29 11 H
unga
ryH
unga
ryDependent on others 11 11 5 18 14 8 18 19 14 6 11 4
Tired 3 4 8 10 14 10 17 6 7 7 13 19 U
nite
dU
nite
dFar away 38 19 25 21 61 32 2 13 33
Stat
es33 14 22
Stat
es
Boredom 14 16 6 12 16 12 15 8 12 12 16 17 Ca
nada
Cana
daEnjoyment 21 16 17 23 14 29 5 3 37 37 35 15
None of the above 0 1 1 2 0 2 1 1 2 2 1 2
Donrsquot know 2 2 3 3 2 2 1 2 0 Ch
ina
6 Ch
ina
hart 7 Many young employees think they are not on course to achieve target retirement income Ja
pan
Japa
n Do you think you will achieve this income [your estimated income needed in retirement]
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
I donrsquot know if I am on course to 56 37 57 59 50 39 49 48 48 41 22 68 achieve my retirement income
No I am on course to achieve around one-quarter (25) of my 10 14 9 13 15 14 14 13 10 10 10 7 retirement income
No I am on course to achieve around 12 20 14 11 19 19 18 15 12 11 23 12 half of my retirement income
No I am on course to achieve around three-quarters (75) of my 8 14 7 4 8 15 9 8 6 11 20 5 retirement income
Yes I am on course to achieve my 15 15 13 14 8 13 11 17 25 27 25 8 retirement income
CQ
CQ
39 | The Young Pragmatic and Penniless Generation
Chart 8 Young people in most countries expect to retire before 65 Q At what age do you expect to retire from all paid employment
Net
herl
ands
Ger
man
y
Swed
en
Uni
ted
Kin
gdom
Fran
ce
Spai
n
Pol
and
Hun
gary
Uni
ted
Stat
es
Cana
da
Chin
a
Japa
n
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
40 or under 0 1 1 0 0 1 3 1 5 12
41-50 1 2 3 5 2 2 6 3 9 4 37 9
51-59 4 4 4 6 2 4 11 5 7 10 30 1
60 5 11 8 12 10 13 19 12 12 16 21 27
61-64 2 11 10 2 20 7 4 13 5 3 1 2
65 17 22 44 31 34 32 16 26 26 32 3 25
66-69 42 32 15 9 12 29 20 13 9 9 0 1
70 19 11 10 18 10 5 10 9 13 12 0 6
71+ 5 5 5 9 4 5 5 3 7 5 1 4
Never 2 1 1 2 2 2 6 4 1 0 0
Donrsquot know 2 3 2 5 3 2 8 9 5 5 1 13
Mean 67 65 65 65 64 65 63 64 63 64 53 59
Median 67 65 65 65 65 65 65 65 65 65 55 60
Chart 9 Younger employees feel they donrsquot have money to invest for retirement Q What is the single biggest obstacle to you saving for retirement right now
Net
herl
ands
Ger
man
y
Swed
en
Uni
ted
Kin
gdom
Fran
ce
Spai
n
Pol
and
Hun
gary
Uni
ted
Stat
es
Cana
da
Chin
a
Japa
n
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
The uncertain economic environment 19 8 13 9 13 19 11 14 12 9 29 27
Lack of money to invest 28 41 33 43 47 34 48 55 47 50 6 19
Fear of poor investment returns over the coming years 2 5 10 7 5 6 8 2 6 8 14 6
Complexity of investment products 4 4 4 3 5 3 5 2 12 5
I donrsquot know how to go about investing for the long-term 2 3 10 8 5 5 3 3 6 8 7 9
The fees charged by financial services companies 2 4 4 2 4 3 4 2 3 5 2 5
I canrsquot afford to take financial advice 3 3 6 8 2 4 3 5 3 2 3 2
I donrsquot trust the financial services industry 12 11 8 6 5 10 6 2 2 3 5 4
I donrsquot see the need to save for the long-term 6 1 2 2 3 3 3 1 2 1 4 3
Concerns about unstable currencies currency fluctuations 2 5 1 3 3 3 4 3 4 5 15 2
Other (PLEASE STATE) 3 3 1 1 3 2 4 6 2 2 1
Donrsquot know 17 12 11 7 8 6 3 6 8 6 3 17
The Young Pragmatic and Penniless Generation | 40
Chart 10 More money would incentivize young employees to save for retirement Q Which if any of the following would encourage you to save for retirement
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsMore generous tax breaks on long-term savings and pensions 20 44 30 32 27 23 42 42 33 43 40 32 products
Ger
man
yG
erm
any
Access to financial education so that I am more aware of what 24 6 14 21 16 22 21 12 23 24 43 25 I need to do for myself
Swed
enSw
eden
Access to professional financial advice so that I have personalized
Uni
ted
20 24 23 23 15 21 25 9 22 23 44 13 U
nite
drecommendations on what steps
Kin
gdom
Kin
gdom
I need to take
Simpler investment products that 12 33 19 28 20 Fr
ance
18 27 16 32 28 36 10 Fr
ance
I can understand with less jargon
Better and more frequent information about my retirement 16 28 20 27 27 23
Spai
n20 18 25 31 45 22
Spai
nsavings
Better legal protection in case I am 12 18 13 18 10 24 18 13 13 19 21 6 P
olan
dP
olan
dsold the wrong product
A pay rise 46 54 44 64 55 50 70 72 67 64 53 37
A better retirement plan pension H
unga
ryH
unga
ry27 32 25 33 29 26 42 35 39 44 33 32 match from my employer
Other 4 2 1 1 2 2 3 3 2 U
nite
d3 0
Uni
ted
Stat
esSt
ates
Donrsquot know 17 9 16 10 10 12 3 8 8 5 3 17
Not applicable - I already have 3 3 4 2 2 1 1 1 2 2 3 sufficient savings Ca
nada
Cana
da
Chin
aCh
ina
Chart 11 A majority of younger employees do not have a written plan for retirement Q Which of the following best describes your retirement planning strategy
Japa
n Ja
pan
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
I have a written plan 7 18 10 9 6 8 6 5 13 10 8 4
I have a plan but it is not written 24 47 37 25 23 31 29 31 37 44 55 24
down
I do not have a plan 61 32 51 61 62 55 62 58 45 42 34 61
Donrsquot know 7 3 3 5 8 6 3 6 4 4 3 12
41 | The Young Pragmatic and Penniless Generation
Chart 12 For young employees friends and family are the leading source of retirement savings information Q And which of these sources (of information) is most important to you
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
Bank adviser 6 11 19 5 25 5 7 4 3 17 10 2 N
ethe
rlan
dsN
ethe
rlan
dsProfessional financial adviser 12 22 10 12 10 19 19 22 21 25 19 10
Insurance agent spokesperson 3 10 2 3 1 3 6 2 3 0 3 2 G
erm
any
Ger
man
yInsurance company website 3 1 3 2 4 4 2 2 1 3 1
Personal finance websites online 8 5 7 8 5 4 10 8 12 6 10 8 retirement planning tools Sw
eden
Swed
enPersonal finance media 2 2 2 2 2 6 3 1 2 1 6 2
Government website 7 1 3 6 U
nite
d5 2 3 3 2 3 7 1
Uni
ted
Kin
gdom
Kin
gdom
Bank website 2 3 3 2 1 0 3 2 1 6 3 3
My employer 12 8 4 9 4 7 5 12 8 5 4 1 Fr
ance
Fran
ceAccountant 2 6 4 4 1 3 1 3 5 5 1 3
Lawyer 2 3 1 2 2 8 4 2 1 2 2 0 Sp
ain
Spai
nFriends and family 21 22 30 28 24 26 18 24 26 20 25 24
None of these P
olan
dP
olan
dNot applicable 21 7 16 18 19 13 17 15 14 9 5 41
Hun
gary
Hun
gary
Chart 13 Most young workers feel their employer should provide some kind of pension Q In the future what if anything should employers do to help people plan for retirement
Uni
ted
Uni
ted
Stat
esSt
ates
Cana
daCa
nada
Chin
aCh
ina
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 Ja
pan
Japa
n Employers should be required to 24 43 20 40 21 26 20 28 37 34 20 30 contribute to workersrsquo pensions
Employers should be required to make a pension available but not to 12 13 7 17 20 15 15 4 11 14 22 5 contribute into it
Employers should not be required to provide pensions but should 15 9 12 8 9 8 11 6 11 9 9 11 provide information on how to plan for retirement
Employers should provide a range of flexible benefits and 13 18 18 16 15 27 25 28 21 22 45 12 allow individuals to choose which benefits they actually want
Nothing ndash it should be left to individual employees to take care 2 2 5 1 4 3 3 5 6 5 1 9 of themselves
Nothing ndash it should be left to the government to take care of its 2 5 5 2 5 8 15 14 1 4 0 4 citizens
Donrsquot know 30 10 32 17 27 12 12 15 13 13 3 29
The Young Pragmatic and Penniless Generation | 42
Chart 14 Workplace pensions are relatively low down in young workersrsquo priorities when choosing a job Q How important to you would the following workplace benefits be if you were choosing your next job
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsBasic salary 86 93 88 91 88 92 90 94 90 93 96 94
Holiday entitlement 87 94 89 91 92 94 91 94 93 94 96 91 G
erm
any
Ger
man
yOvertime and bonus pay 86 93 87 88 89 90 89 94 90 91 97 90
Location of workplace 88 91 86 92 89 90 89 92 93 93 92 86 Sw
eden
Swed
enMedical health insurance 73 92 84 65 86 87 88 87 93 94 98 83
Opportunities for career progression 86 91 81 90 90 94 91 94 92 91 96 81 U
nite
dU
nite
dAccess to a workplace retirement 85 85 81 82
Kin
gdom
78 84 80 78 84 86 93 74 K
ingd
omplan with employer contributions
Access to good training provision 85 87 85 88 86 91 85 93 86 90 95 74 Fr
ance
Fran
ceFlexible working hours 79 87 58 86 81 89 81 87 91 91 92 57
Life insurance 72 75 79 69 80 82 Sp
ain
84 80 81 88 93 74 Sp
ain
(death in service benefits)
Phased retirement or other employer programs providing for 74 54 75 71 72 81 76 74 76 81 91 65
Pol
and
Pol
and
a transition into retirement
Ability to work past the normal 68 57 64 65 64 74 72 65 74 76 80 70 retirement age H
unga
ryH
unga
ry
Access to a workplace retirement 62 74 61 68 59 77 61 47 68 74 89 65 plan without employer contributions U
nite
dU
nite
dSt
ates
Stat
esEmployee share plans 50 72 54 65 59 73 61 51 64 73 91 55
Access to creche help with the 67 75 64 56 69 79 75 83 58 69 89 68 cost of childcare Ca
nada
Cana
da
Opportunities for foreign travel 53 54 60 55 50 71 58 66 57 61 79 37
Company car 51 46 45 47 49 63 51 49 36 49 69 Ch
ina
39 Ch
ina
Japa
n Ja
pan
Chart 15 Young workers think the state pension will need to be reformed Q With the cost of government pensions becoming a greater concern as people live longer which if any of the following do you think
the government should undertake
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
The government should reduce the overall cost of state pension 15 33 16 15 16 20 28 22 21 26 30 16 provision by reducing the value of individual pension plans
The government should increase overall funding available for the 12 21 30 22 14 34 19 26 21 18 29 10 state pension through raising taxes
43 | The Young Pragmatic and Penniless Generation
he government should take a alanced approach with some 27 26 12 30 28 23 24 16 34 31 38 41 eductions in individual payments nd some increases in tax
he government should not do nything State pension provision 7 2 12 5 3 4 3 3 5 4 0 5 ill remain perfectly affordable in he future
onrsquot know 38 19 29 29 39 20 26 34 19 21 4 28
Net
herl
ands
art 16 Products which protect against investment risk are the most important to young workers ( interested) Thinking about the types of financial products you could purchase to help provide you with security in retirement on a scale of 1 to 5
how interested are you in the following options G
erm
any
Swed
en
Uni
ted
Kin
gdom
ase 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 Fr
ance
100 100 100 100 100 100 100 100 100 100 100 100
product providing a guaranteed etirement income stream or 75 81 73 76 74 83 78 76 87 85 94 69
Spai
nifetime income in retirement
product which protects my 74 79 73 76 72 82 77 74 84 86 94 65 etirement income against inflation P
olan
d
product which guarantees that I 72 82 73 78 75 81 76 73 86 86 90 67 onrsquot lose my initial investment H
unga
ry product which helps meet the ost of long-term care if I become 74 79 74 77 70 79 76 71 86 85 84 66
Uni
ted
nable to look after myself St
ates
product which protects my capital 71 81 71 76 68 76 77 73 84 83 93 65 rom poor investment returns Ca
nada
product which generates a etirement income and allows 69 78 71 75 68 81 77 72 84 86 94 70 e to take a lump sum from the
Chin
anvestment should I need to
product where the annual 66 78 68 75 72 79 77 70 85 86 87 64 anagement charges are kept low Ja
pan
product which enables me to eep some control over how my 71 73 70 75 72 80 75 69 88 85 91 63 avings are invested during my etirement
product which manages the sset allocation so that I am never 68 70 67 73 66 76 71 67 80 83 95 60 xposed to a level of risk Irsquom not omfortable with
product which continues to rovide a retirement income to my 74 78 71 75 73 81 79 73 86 82 94 60 pouse in the event that I die first
product which protects my family gainst having to pay estate taxes 73 76 71 74 75 81 75 69 82 82 89 56 hen I die
product which locks in investment 72 71 63 73 64 71 59 56 81 84 89 61 eturns during the good years
Tbra
Tawt
D
ChQ
B
Arl
Ar
Ad
Acu
Af
Armi
Am
Aksr
Aaec
Aps
Aaw
Ar
The Young Pragmatic and Penniless Generation | 44
29 | The Young Pragmatic and Penniless Generation
Glossary
Aegon Retirement Readiness Index (ARRI) c areer average retirement plan The ARRI assesses the relative levels of retirement A type of defined benefit plan that is based on an
preparedness of employees across different countries on a employeersquos average retirement earnings over the duration
scale from 1 to 10 The Index is based on three questions of plan membership Same as average salary plan
covering attitudes and three questions covering behaviors
defined ambition (DA) plan average salary plan A type of retirement plan in which retirement plan risks
A type of defined benefit plan that is based on an are shared between the employer and the employee
employeersquos average retirement earnings over the duration It offers greater certainty to savers around the final value
of plan membership Same as career average plan of their retirement assets than in DC plans and less
cost volatility for employers than with DB plans In the
a nnuity Netherlands Defined Ambition (DA) retirement plans are
A form of contract sold by life insurance companies that being introduced in order to help relieve the pressure on
guarantees a fixed or variable payment to the annuitant employers while still trying to provide employees with a
at some future time usually retirement All capital in the more secure retirement plan The United Kingdom too is
annuity grows tax-deferred looking at DA retirement plans as a solution
auto enrollment defined benefit (DB) plan An employer-sponsored retirement plan in which the An employer-sponsored retirement plan where the amount
employer is able to enroll an employee without that of future benefits an employee will receive from the plan is
employeersquos express authorization The employer determines defined typically by a formula based on salary history and
what percentage of the employeersquos salary or wages is years of service The amount of contributions the employer
contributed to the plan The employee is able to change is required to make will depend on the investment returns
this percentage and can opt out of enrollment in the plan experienced by the plan and the benefits promised
Contrast defined contribution plan
a uto-escalation A feature of a plan which automatically increases the defined contribution (DC) plan percentage of (retirement) funds saved from salary An employer-sponsored retirement plan such as a 401(k)
This feature generally uses a default or standard plan or a 403(b) plan in the United States in which
contribution escalation rate contributions are made to individual participant accounts
Depending on the type of DC plan contributions may be
B aby Boomers made by the employee the employer or both
A term used to refer to people generally born between
the end of World War II in 1945 and the mid 1960s The employeersquos benefits at retirement or termination of
Other generations Silent Generation - the generation born employment are based on the employee and employer
between 1925 and 1945 Generation X - the generation contributions and earnings and losses on those
born between 1965 and 1979 Millennials or Generation contributions See also 401(k) and 403(b) plan
Y - the generation born between 1980 and 2000 and often Contrast defined benefit plan
classified as the children of Baby Boomers
The Young Pragmatic and Penniless Generation | 30
401(k) plan An employer sponsored retirement plan that enables
employees to make tax-deferred contributions from their
salaries to the plan
403(b) plan An employer-sponsored defined contribution plan that
enables employees of universities public schools and
non-profit organizations to make tax-deferred contributions
from their salaries to the plan
final salary plan A type of defined benefit plan in which retirement
benefits are based on final retirement salary in the years
immediately before retirement benefits are received
Millennials A term used to refer to the people born from about 1980
to 2000 brought up using digital technology They are
often classified as the children of Baby Boomers
r etirement (or pension) plan Provides replacement for salary when a person is no
longer working due to retirement In the case of a defined
benefit retirement plan the employer or union contributes
to the plan which pays a predetermined benefit for the
rest of the employeersquos life based on length of service and
salary Payments may be made either directly or through
an annuity Retirement plan payments are taxable income
to recipients in the year received The employer or union
has fiduciary responsibility to invest the retirement plan
funds in stocks bonds real estate and other assets earn
a satisfactory rate of return and make payments to retired
workers Retirement plan funds holding trillions of dollars
are one of the largest investment forces in the stock
bond and real estate markets If the employer defaults in
the United States retirement plan payments are usually
guaranteed by the Pension Benefit Guaranty Corporation
(PBGC)
variable annuities (VA) An insurance contract in which the insurance company
guarantees a minimum payment at the end of the
accumulation period The payments may vary depending
on the financial performance of the managed portfolio
31 | The Young Pragmatic and Penniless Generation
About Aegon Transamerica Center for Retirement Studiesreg and Cicero Consulting
Aegon Transamerica Center Aegon is an international life insurance pensions and asset reg management company with businesses in over 20 markets for Retirement Studies in the Americas Europe and Asia Aegon companies employ The Transamerica Center for Retirement Studiesreg (TCRS) is
around 24000 people and serve millions of customers a division of the Transamerica Institute a nonprofit private
worldwide foundation TCRS is dedicated to educating the public on
wwwaegoncom emerging trends surrounding retirement security in the
United States TCRSrsquo research emphasizes employer-sponsored
In 2010 Aegon became a founding member of the Global retirement plans issues faced by small to mid-sized companies
Coalition on Aging which seeks to raise awareness of aging and their employees and the implications of legislative and
issues among policymakers and the general public A major aim regulatory changes Transamerica Institute is funded by
of the coalition is to transform the way we think and speak contributions from Transamerica Life Insurance Company and
about aging replacing the familiar rhetoric of lsquoproblemsrsquo with its affiliates and may receive funds from unaffiliated third-
a more positive discussion of lsquopossibilitiesrsquo and lsquoopportunitiesrsquo parties For more information about TCRS please refer to
wwwglobalcoalitiononagingcom wwwtransamericacenterorg
Cicero Consulting A leading consultancy firm serving the banking insurance and
asset management sector Cicero specializes in public policy
and communications consulting as well as global thought
leadership and independent market research Cicero was
established in 2001 and now operates from offices in London
Brussels Washington and Singapore As a market leader in
pensions and retirement research Cicero designed
and analyzed the research and contributed to the report
wwwcicero-groupcom
The Young Pragmatic and Penniless Generation | 32
Marta acebo Mark Green Patricia Plas
Paula alvarez douGlas henck scott roane
Frits bart wendel hoFMan thurstan robinson
Grace basile
lynette belFry
andrew berwick
Frans van der horst
tatsuo kai
herMan kaPPelle
Patti rowey
sarah russell
Joost van schaGen
robin boon Gaacutebor kePecs dick schiethart
bert-JaaP brons Marco keiM erik schouten
douG brooks
libby buet
kent callahan
JaiMe kirkPatrick
bas knol
roGer koch
anGela seyMour Jackson
kate sMith
renske stoker
Jeanne de cervens
dana chen
Peter kunkel
alexander kuiPers
eyleen sun
MartiJn tans
arkadiusz chMurzynski
heidi cho
brian lewis
Mike linder
GreG tucker
Mark twiGG
siMon clow siMon luke catherine wanG
robert colliGnon Jason Ma Marc van weede
catherine collinson GrzeGorz Mathea tiM willaert
wendy daniels
Michel denizot
edit drevenka
Paul Middleton
takaoh MiyaGawa
david Moulton
daniel wriGht
alex wynaendts
MacieJ zaPala
Jan driessen
kelly Fu
adrian Grace
Mark Mullin
Marcelle noltenius
stiG nybo
Peacuteter zatykoacute
vicky zeldin
Disclaimer This repor t contains general information only and does
not constitute a solicitation or offer No rights can be
derived from this repor t Aegon its par tners and any of
their affiliates or employees do not guarantee warrant
or represent the accuracy or completeness of the
information contained in the repor t
Acknowledgements
33 | The Young Pragmatic and Penniless Generation
References and notes i For a comparison of different retirement systems see lsquoPensions at a Glance 2011rsquo OECD 2011 ii As the survey was carried out online the survey results in China are based toward people living in urban areas iii ldquoPensions Marketsrdquo TheCityUK March 2013 p9 iv Global Employment Trends for Youth 2013 A generation at risk International Labour Organisation 2013 p2 v Eurostat July 2013 vi OECD Employment and Labour Markets Key Tables from OECD No 2 2012 vii The Federal Reserve Bank of New York 2012 Quarterly Report on Household Debt March 29 2013 viii World Bank ix lsquoWorld-class povertyrsquo The Economist February 27 2013
httpwwweconomistcomblogsanalects201302chinas-poor x lsquoThe Chinese slow down in char tsrsquo The Economist July 15 2013 xi lsquoChina rsquos welfare system difficult inflexible and blatantly unfairrsquo The Guardian April 23 2013
httpwwwtheguardiancomglobal-development2013apr23china-welfare-system-inflexible-unfair xii lsquo The Dutch experience with Defined Ambition pensions and the impact on companiesrsquo Aegon Global Pensions March 12 2013
httpwwwaegonglobalpensionscomenHomePublicationsNews-archiveNewsThe-Dutch-experience-with-Defined
Ambition-pensions-and-what-that-may-mean-for-companies-in-the-Netherlands-and-the-UK
shy
The Young Pragmatic and Penniless Generation | 34
Contact information HE ADQUARTER S
Aegon NV
PO Box 85
2501 CB The Hague
Telephone +31 70 344 32 10
w w waegoncom
MEDIA REL ATIONS
Telephone +31 70 344 89 56
Email gcc-iraegoncom
Countr y Index score
Germany 548
China 541
Canada 524
United States 519
The Netherlands 488
United Kingdom 486
Sweden 483
France 475
Hungar y 473
Poland 463
Spain 440
Japan 430
Total 489
Appendix 1 Aegon Retirement Readiness Index (ARRI) - technical note
Aegon Retirement Readiness Index (ARRI)-technical note 2013 Weightings (2012 in brackets) A sample of 12000 pre and post retirees was drawn from 1 Personal responsibilit y 20 (30)
twelve countries Of these 10800 (90) were pre-retirees 2 Level of awareness 30 (35)
and these were chosen for fur ther analysis of their plans 3 Financial capability Understanding 30 (25)
for retirement The Index that was developed forms an 4 Retirement planning 50 (50)
assessment of how well an individual perceives the adequacy 5 Financial preparedness 60 (60)
of his her own finances and financial awareness specifically 6 Income replacement 35 (35)
for addressing his retirement needs
Note that the weights devised to show the relative
The lsquotargetrsquo for the Index impor tance of each question in calculating the Index add to
The question on current savings activity was designated as the 225 These were then re-scaled so that a final scale of 1 to
target question (dependent variable) for predicting the level of 10 was calculated
preparedness for retirement Responses to this question were
then correlated with each of the six key questions (variables) Final scores by country below to understand which were driving the activity These weightings were multiplied by the actual scores for each
This was done because it was not felt to be correct to give respondent for each of the six Index questions and aggregated
each of the six variables described below an equal weight as to obtain a provisional score This was then adjusted to
they appeared to have quite different relationships to the give countr y scores out of 1 to 10 (A score of 1 to 10 had
target question sufficient differentiation to be used as the scale for analysis)
1 Personal responsibilit y for income in retirement
2 Level of awareness of need to plan for retirement
3 F inancial capability Understanding of financial matters
regarding plans for retirement
4 Retirement planning Level of development of plans
5 Financial preparedness for retirement
6 Income replacement Level of projected income replacement
The weighting To estimate the statistical significance of the decline in overall
scores in this yearrsquos Index is theoretically incalculable
Two things have changed from 2012 to 2013
1 C anada and China have joined the sample
2 The new countries have thus influenced the weights of
emphasis placed on the 6 variables used to calculate
the score hence the weights attached to the complex
calculation have changed
However it is noticeable that for countries which were sampled
in both time periods the mean scores for the six individual
variables have almost invariably declined and on average more
than half of them have shown a significant level of decline
In particular the question lsquoDo you think you will achieve this
incomersquo has for all countries shown a significant level of
decline We thus hypothesize that the comparative results
show a significant decline
The Young Pragmatic and Penniless Generation | 36
Net
herl
ands
Net
herl
ands
Net
herl
ands
Ger
man
yG
erm
any
Ger
man
yBase 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
Better off 7 4 23 Sw
eden
Swed
en11 5 7 8 3 11 14 50 5
Swed
en
About the same 19 18 27 23 8 19 18 13 29 29 24 21 U
ntie
dU
ntie
dU
nite
d Worse off 66 74 41 58 79 69 71 76 51 47 21 55
Kin
gdom
Kin
gdom
Kin
gdom
Donrsquot know 9 3 9 9 9 4 4 8 9 10 6 19
Fran
ceFr
ance
Fran
ce
Chart 2 Education of 20 ndash 29 year olds by country Q Please choose from the following list the highest level of educational or professional qualification you have
Spai
nSp
ain
Spa
in
Pol
and
Pol
and
Pol
and
Hun
gary
Hun
gary
Hun
gar y
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
dU
nite
d 100 100 100 100 100 100 100 100 100
Stat
es100 100 100
Stat
esSt
ates
Less than high school graduate 2 44 6 14 1 3 2 7 1 3 Ca
nada
Cana
daC
anad
aHigh school graduate 11 33 53 23 22 22 4 41 14 21 1 2
Some college or trade school 46 2 9 9 9 19 37 14 28 20 4 33 Ch
ina
Chin
aC
hina
College degree University degree 31 15 27 30 41 43 21 33 50 46 9 57
Postgraduate degree or 8 3 3 23 25 11 36 1 8 9 80 6 qualification Ja
pan
Japa
n Ja
pan
Other 2 4 1 1 1 2 0 5 0 6 2
None 0 1 1 0 1 0 0
NET Less than undergrad degree 61 82 70 47 34 46 43 66 42 45 11 37
NET Undergrad degree or higher 39 18 30 53 66 54 57 34 58 55 89 63
Chart 3 Aegon Retirement Readiness Index scores for young employees by country
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
NET Low Index (0-5) 80 64 79 81 85 78 81 73 65 61 61 87
NET Medium Index (6-7) 15 30 18 15 14 21 17 23 25 31 31 12
NET High Index (8-10) 4 6 3 3 1 2 2 4 10 8 7 1
Appendix 2 Country comparisons Chart 1 The majority of young employees believe that they will be worse off in retirement compared to their parents Q Do you think that future generations of retirees will be better off or worse off than those currently in retirement
37 | The Young Pragmatic and Penniless Generation
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsI always make sure that 27 34 27 26 17 14 19 22 35 33 32 20 I am saving for retirement
I only save for retirement G
erm
any
Ger
man
y21 27 20 13 17 21 16 6 17 24 20 24 occasionally from time to time
I am not saving for retirement now 6 11 8 11 5 15 9 4 10 8 9 5 although I have in the past Sw
eden
Swed
en
I am not saving for retirement 35 23 34 46 53 40 49 54 36 33 38 46 though I do intend to U
nite
dU
ntie
dK
ingd
omK
ingd
om I have never saved for retirement and 11 6 10 5 8 10 6 13 3 2 1 6 donrsquot intend to
Fran
ceFr
ance
Chart 5 Younger people are more likely not to be using any means of retirement savings Sp
ain
Spai
nQ Which financial means if any are you currently using to prepare for your retirement
Pol
and
Pol
and
only asked in Germany only asked in Spain
Hun
gary
Hun
gary
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
dSt
ates
Stat
es100 100 100 100 100 100 100 100 100 100 100 100
Defined benefit plan 16 10 25 29 15 3 76 11 20 13 5 Ca
nada
Cana
daDefined contribution plan 28 10 17 19 19 14 10 23 40 7 3
Private pension 8 18 14 10 5 9 4 13 12 40 66 4 Ch
ina
Chin
a Government pension social security 12 43 14 21 8 7 4 18 27 33 71 35
Stocks 5 12 14 7 4 17 7 2 13 10 23 9
Bonds 1 8 5 6 2 16 4 2 8 13 14 3 Ja
pan
Japa
n
Mutual funds 2 14 23 4 2 10 3 4 7 16 9 6
Investment insurances (annuities) 2 3 2 3 2 9 4 5 2 4 6 1
Savings accounts 23 37 38 25 23 6 29 15 36 37 65 36
Investment property 2 10 6 7 9 2 5 2 5 11 18 1
Employee stock purchase 1 1 1 4 1 29 0 4 1 7 1
My home 10 5 8 7 7 8 4 6 6 14 30 1
Reverse mortgage 1 4 2 4
My business 2 1 3 2 2 4 1 1 2 4 12 1
Inheritance 3 11 7 11 7 9 9 8 7 9 6 2
Annuities 1 15 2 2 1 4 3 2 1 2 8
Long-term care insurance 2 1 3 2 9 5 1 6 4 7 1
Life insurance 6 11 8 8 14 3 18 15 19 18 36 17
Unterstuumltzungskasse aus 2 Eigenmitteln finanziert
Unterstuumltzungskasse vom 2 Arbeitgeber finanziert
Chart 4 Younger employees are much more likely to aspire to save for retirement Which of the following best explains your approach to saving for retirement This can include money you contribute to any long-term
investment including pensions stocks and shares investment-linked insurances property etc
Q
The Young Pragmatic and Penniless Generation | 38
Plan de empleo mixto 2 (combinacioacuten de las dos anteriores)
Other 1 6 4 0 1 2 2 3 2 2 3 3
None nothing 8 14 12 23 25 31 6 27 21 17 3 24
Donrsquot know 29 6 17 13 19 8 4 9 7 7 0 9
hart 6 The younger generation has more negative associations of retirement Which if any of the following words do you most associate with retirement
Net
herl
ands
Net
herl
ands
Ger
man
yG
erm
any
Swed
enSw
eden
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
d100 100 100 100 100 100 100 100 100 100 100 100
Kin
gdom
Kin
gdom
Freedom 35 32 36 39 19 26 11 20 35 40 37 33
Opportunity 7 27 25 18 4 8 9 10 17 16 9 16 Fr
ance
Fran
ceLeisure 58 48 36 41 23 24 43 32 50 50 55 6
Excitement 2 5 3 8 2 6 1 2 17 17 4 3 Sp
ain
Spai
nPoverty 11 26 23 11 26 14 37 44 7 5 6 20
Insecurity 34 24 18 16 20 18 35 56 10 9 18 44 P
olan
dP
olan
dLoneliness 4 10 17 16 12 7 11 8 5 9 20 12
Ill health 2 19 7 14 15 9 49 23 6 6 29 11 H
unga
ryH
unga
ryDependent on others 11 11 5 18 14 8 18 19 14 6 11 4
Tired 3 4 8 10 14 10 17 6 7 7 13 19 U
nite
dU
nite
dFar away 38 19 25 21 61 32 2 13 33
Stat
es33 14 22
Stat
es
Boredom 14 16 6 12 16 12 15 8 12 12 16 17 Ca
nada
Cana
daEnjoyment 21 16 17 23 14 29 5 3 37 37 35 15
None of the above 0 1 1 2 0 2 1 1 2 2 1 2
Donrsquot know 2 2 3 3 2 2 1 2 0 Ch
ina
6 Ch
ina
hart 7 Many young employees think they are not on course to achieve target retirement income Ja
pan
Japa
n Do you think you will achieve this income [your estimated income needed in retirement]
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
I donrsquot know if I am on course to 56 37 57 59 50 39 49 48 48 41 22 68 achieve my retirement income
No I am on course to achieve around one-quarter (25) of my 10 14 9 13 15 14 14 13 10 10 10 7 retirement income
No I am on course to achieve around 12 20 14 11 19 19 18 15 12 11 23 12 half of my retirement income
No I am on course to achieve around three-quarters (75) of my 8 14 7 4 8 15 9 8 6 11 20 5 retirement income
Yes I am on course to achieve my 15 15 13 14 8 13 11 17 25 27 25 8 retirement income
CQ
CQ
39 | The Young Pragmatic and Penniless Generation
Chart 8 Young people in most countries expect to retire before 65 Q At what age do you expect to retire from all paid employment
Net
herl
ands
Ger
man
y
Swed
en
Uni
ted
Kin
gdom
Fran
ce
Spai
n
Pol
and
Hun
gary
Uni
ted
Stat
es
Cana
da
Chin
a
Japa
n
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
40 or under 0 1 1 0 0 1 3 1 5 12
41-50 1 2 3 5 2 2 6 3 9 4 37 9
51-59 4 4 4 6 2 4 11 5 7 10 30 1
60 5 11 8 12 10 13 19 12 12 16 21 27
61-64 2 11 10 2 20 7 4 13 5 3 1 2
65 17 22 44 31 34 32 16 26 26 32 3 25
66-69 42 32 15 9 12 29 20 13 9 9 0 1
70 19 11 10 18 10 5 10 9 13 12 0 6
71+ 5 5 5 9 4 5 5 3 7 5 1 4
Never 2 1 1 2 2 2 6 4 1 0 0
Donrsquot know 2 3 2 5 3 2 8 9 5 5 1 13
Mean 67 65 65 65 64 65 63 64 63 64 53 59
Median 67 65 65 65 65 65 65 65 65 65 55 60
Chart 9 Younger employees feel they donrsquot have money to invest for retirement Q What is the single biggest obstacle to you saving for retirement right now
Net
herl
ands
Ger
man
y
Swed
en
Uni
ted
Kin
gdom
Fran
ce
Spai
n
Pol
and
Hun
gary
Uni
ted
Stat
es
Cana
da
Chin
a
Japa
n
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
The uncertain economic environment 19 8 13 9 13 19 11 14 12 9 29 27
Lack of money to invest 28 41 33 43 47 34 48 55 47 50 6 19
Fear of poor investment returns over the coming years 2 5 10 7 5 6 8 2 6 8 14 6
Complexity of investment products 4 4 4 3 5 3 5 2 12 5
I donrsquot know how to go about investing for the long-term 2 3 10 8 5 5 3 3 6 8 7 9
The fees charged by financial services companies 2 4 4 2 4 3 4 2 3 5 2 5
I canrsquot afford to take financial advice 3 3 6 8 2 4 3 5 3 2 3 2
I donrsquot trust the financial services industry 12 11 8 6 5 10 6 2 2 3 5 4
I donrsquot see the need to save for the long-term 6 1 2 2 3 3 3 1 2 1 4 3
Concerns about unstable currencies currency fluctuations 2 5 1 3 3 3 4 3 4 5 15 2
Other (PLEASE STATE) 3 3 1 1 3 2 4 6 2 2 1
Donrsquot know 17 12 11 7 8 6 3 6 8 6 3 17
The Young Pragmatic and Penniless Generation | 40
Chart 10 More money would incentivize young employees to save for retirement Q Which if any of the following would encourage you to save for retirement
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsMore generous tax breaks on long-term savings and pensions 20 44 30 32 27 23 42 42 33 43 40 32 products
Ger
man
yG
erm
any
Access to financial education so that I am more aware of what 24 6 14 21 16 22 21 12 23 24 43 25 I need to do for myself
Swed
enSw
eden
Access to professional financial advice so that I have personalized
Uni
ted
20 24 23 23 15 21 25 9 22 23 44 13 U
nite
drecommendations on what steps
Kin
gdom
Kin
gdom
I need to take
Simpler investment products that 12 33 19 28 20 Fr
ance
18 27 16 32 28 36 10 Fr
ance
I can understand with less jargon
Better and more frequent information about my retirement 16 28 20 27 27 23
Spai
n20 18 25 31 45 22
Spai
nsavings
Better legal protection in case I am 12 18 13 18 10 24 18 13 13 19 21 6 P
olan
dP
olan
dsold the wrong product
A pay rise 46 54 44 64 55 50 70 72 67 64 53 37
A better retirement plan pension H
unga
ryH
unga
ry27 32 25 33 29 26 42 35 39 44 33 32 match from my employer
Other 4 2 1 1 2 2 3 3 2 U
nite
d3 0
Uni
ted
Stat
esSt
ates
Donrsquot know 17 9 16 10 10 12 3 8 8 5 3 17
Not applicable - I already have 3 3 4 2 2 1 1 1 2 2 3 sufficient savings Ca
nada
Cana
da
Chin
aCh
ina
Chart 11 A majority of younger employees do not have a written plan for retirement Q Which of the following best describes your retirement planning strategy
Japa
n Ja
pan
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
I have a written plan 7 18 10 9 6 8 6 5 13 10 8 4
I have a plan but it is not written 24 47 37 25 23 31 29 31 37 44 55 24
down
I do not have a plan 61 32 51 61 62 55 62 58 45 42 34 61
Donrsquot know 7 3 3 5 8 6 3 6 4 4 3 12
41 | The Young Pragmatic and Penniless Generation
Chart 12 For young employees friends and family are the leading source of retirement savings information Q And which of these sources (of information) is most important to you
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
Bank adviser 6 11 19 5 25 5 7 4 3 17 10 2 N
ethe
rlan
dsN
ethe
rlan
dsProfessional financial adviser 12 22 10 12 10 19 19 22 21 25 19 10
Insurance agent spokesperson 3 10 2 3 1 3 6 2 3 0 3 2 G
erm
any
Ger
man
yInsurance company website 3 1 3 2 4 4 2 2 1 3 1
Personal finance websites online 8 5 7 8 5 4 10 8 12 6 10 8 retirement planning tools Sw
eden
Swed
enPersonal finance media 2 2 2 2 2 6 3 1 2 1 6 2
Government website 7 1 3 6 U
nite
d5 2 3 3 2 3 7 1
Uni
ted
Kin
gdom
Kin
gdom
Bank website 2 3 3 2 1 0 3 2 1 6 3 3
My employer 12 8 4 9 4 7 5 12 8 5 4 1 Fr
ance
Fran
ceAccountant 2 6 4 4 1 3 1 3 5 5 1 3
Lawyer 2 3 1 2 2 8 4 2 1 2 2 0 Sp
ain
Spai
nFriends and family 21 22 30 28 24 26 18 24 26 20 25 24
None of these P
olan
dP
olan
dNot applicable 21 7 16 18 19 13 17 15 14 9 5 41
Hun
gary
Hun
gary
Chart 13 Most young workers feel their employer should provide some kind of pension Q In the future what if anything should employers do to help people plan for retirement
Uni
ted
Uni
ted
Stat
esSt
ates
Cana
daCa
nada
Chin
aCh
ina
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 Ja
pan
Japa
n Employers should be required to 24 43 20 40 21 26 20 28 37 34 20 30 contribute to workersrsquo pensions
Employers should be required to make a pension available but not to 12 13 7 17 20 15 15 4 11 14 22 5 contribute into it
Employers should not be required to provide pensions but should 15 9 12 8 9 8 11 6 11 9 9 11 provide information on how to plan for retirement
Employers should provide a range of flexible benefits and 13 18 18 16 15 27 25 28 21 22 45 12 allow individuals to choose which benefits they actually want
Nothing ndash it should be left to individual employees to take care 2 2 5 1 4 3 3 5 6 5 1 9 of themselves
Nothing ndash it should be left to the government to take care of its 2 5 5 2 5 8 15 14 1 4 0 4 citizens
Donrsquot know 30 10 32 17 27 12 12 15 13 13 3 29
The Young Pragmatic and Penniless Generation | 42
Chart 14 Workplace pensions are relatively low down in young workersrsquo priorities when choosing a job Q How important to you would the following workplace benefits be if you were choosing your next job
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsBasic salary 86 93 88 91 88 92 90 94 90 93 96 94
Holiday entitlement 87 94 89 91 92 94 91 94 93 94 96 91 G
erm
any
Ger
man
yOvertime and bonus pay 86 93 87 88 89 90 89 94 90 91 97 90
Location of workplace 88 91 86 92 89 90 89 92 93 93 92 86 Sw
eden
Swed
enMedical health insurance 73 92 84 65 86 87 88 87 93 94 98 83
Opportunities for career progression 86 91 81 90 90 94 91 94 92 91 96 81 U
nite
dU
nite
dAccess to a workplace retirement 85 85 81 82
Kin
gdom
78 84 80 78 84 86 93 74 K
ingd
omplan with employer contributions
Access to good training provision 85 87 85 88 86 91 85 93 86 90 95 74 Fr
ance
Fran
ceFlexible working hours 79 87 58 86 81 89 81 87 91 91 92 57
Life insurance 72 75 79 69 80 82 Sp
ain
84 80 81 88 93 74 Sp
ain
(death in service benefits)
Phased retirement or other employer programs providing for 74 54 75 71 72 81 76 74 76 81 91 65
Pol
and
Pol
and
a transition into retirement
Ability to work past the normal 68 57 64 65 64 74 72 65 74 76 80 70 retirement age H
unga
ryH
unga
ry
Access to a workplace retirement 62 74 61 68 59 77 61 47 68 74 89 65 plan without employer contributions U
nite
dU
nite
dSt
ates
Stat
esEmployee share plans 50 72 54 65 59 73 61 51 64 73 91 55
Access to creche help with the 67 75 64 56 69 79 75 83 58 69 89 68 cost of childcare Ca
nada
Cana
da
Opportunities for foreign travel 53 54 60 55 50 71 58 66 57 61 79 37
Company car 51 46 45 47 49 63 51 49 36 49 69 Ch
ina
39 Ch
ina
Japa
n Ja
pan
Chart 15 Young workers think the state pension will need to be reformed Q With the cost of government pensions becoming a greater concern as people live longer which if any of the following do you think
the government should undertake
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
The government should reduce the overall cost of state pension 15 33 16 15 16 20 28 22 21 26 30 16 provision by reducing the value of individual pension plans
The government should increase overall funding available for the 12 21 30 22 14 34 19 26 21 18 29 10 state pension through raising taxes
43 | The Young Pragmatic and Penniless Generation
he government should take a alanced approach with some 27 26 12 30 28 23 24 16 34 31 38 41 eductions in individual payments nd some increases in tax
he government should not do nything State pension provision 7 2 12 5 3 4 3 3 5 4 0 5 ill remain perfectly affordable in he future
onrsquot know 38 19 29 29 39 20 26 34 19 21 4 28
Net
herl
ands
art 16 Products which protect against investment risk are the most important to young workers ( interested) Thinking about the types of financial products you could purchase to help provide you with security in retirement on a scale of 1 to 5
how interested are you in the following options G
erm
any
Swed
en
Uni
ted
Kin
gdom
ase 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 Fr
ance
100 100 100 100 100 100 100 100 100 100 100 100
product providing a guaranteed etirement income stream or 75 81 73 76 74 83 78 76 87 85 94 69
Spai
nifetime income in retirement
product which protects my 74 79 73 76 72 82 77 74 84 86 94 65 etirement income against inflation P
olan
d
product which guarantees that I 72 82 73 78 75 81 76 73 86 86 90 67 onrsquot lose my initial investment H
unga
ry product which helps meet the ost of long-term care if I become 74 79 74 77 70 79 76 71 86 85 84 66
Uni
ted
nable to look after myself St
ates
product which protects my capital 71 81 71 76 68 76 77 73 84 83 93 65 rom poor investment returns Ca
nada
product which generates a etirement income and allows 69 78 71 75 68 81 77 72 84 86 94 70 e to take a lump sum from the
Chin
anvestment should I need to
product where the annual 66 78 68 75 72 79 77 70 85 86 87 64 anagement charges are kept low Ja
pan
product which enables me to eep some control over how my 71 73 70 75 72 80 75 69 88 85 91 63 avings are invested during my etirement
product which manages the sset allocation so that I am never 68 70 67 73 66 76 71 67 80 83 95 60 xposed to a level of risk Irsquom not omfortable with
product which continues to rovide a retirement income to my 74 78 71 75 73 81 79 73 86 82 94 60 pouse in the event that I die first
product which protects my family gainst having to pay estate taxes 73 76 71 74 75 81 75 69 82 82 89 56 hen I die
product which locks in investment 72 71 63 73 64 71 59 56 81 84 89 61 eturns during the good years
Tbra
Tawt
D
ChQ
B
Arl
Ar
Ad
Acu
Af
Armi
Am
Aksr
Aaec
Aps
Aaw
Ar
The Young Pragmatic and Penniless Generation | 44
Glossary
Aegon Retirement Readiness Index (ARRI) c areer average retirement plan The ARRI assesses the relative levels of retirement A type of defined benefit plan that is based on an
preparedness of employees across different countries on a employeersquos average retirement earnings over the duration
scale from 1 to 10 The Index is based on three questions of plan membership Same as average salary plan
covering attitudes and three questions covering behaviors
defined ambition (DA) plan average salary plan A type of retirement plan in which retirement plan risks
A type of defined benefit plan that is based on an are shared between the employer and the employee
employeersquos average retirement earnings over the duration It offers greater certainty to savers around the final value
of plan membership Same as career average plan of their retirement assets than in DC plans and less
cost volatility for employers than with DB plans In the
a nnuity Netherlands Defined Ambition (DA) retirement plans are
A form of contract sold by life insurance companies that being introduced in order to help relieve the pressure on
guarantees a fixed or variable payment to the annuitant employers while still trying to provide employees with a
at some future time usually retirement All capital in the more secure retirement plan The United Kingdom too is
annuity grows tax-deferred looking at DA retirement plans as a solution
auto enrollment defined benefit (DB) plan An employer-sponsored retirement plan in which the An employer-sponsored retirement plan where the amount
employer is able to enroll an employee without that of future benefits an employee will receive from the plan is
employeersquos express authorization The employer determines defined typically by a formula based on salary history and
what percentage of the employeersquos salary or wages is years of service The amount of contributions the employer
contributed to the plan The employee is able to change is required to make will depend on the investment returns
this percentage and can opt out of enrollment in the plan experienced by the plan and the benefits promised
Contrast defined contribution plan
a uto-escalation A feature of a plan which automatically increases the defined contribution (DC) plan percentage of (retirement) funds saved from salary An employer-sponsored retirement plan such as a 401(k)
This feature generally uses a default or standard plan or a 403(b) plan in the United States in which
contribution escalation rate contributions are made to individual participant accounts
Depending on the type of DC plan contributions may be
B aby Boomers made by the employee the employer or both
A term used to refer to people generally born between
the end of World War II in 1945 and the mid 1960s The employeersquos benefits at retirement or termination of
Other generations Silent Generation - the generation born employment are based on the employee and employer
between 1925 and 1945 Generation X - the generation contributions and earnings and losses on those
born between 1965 and 1979 Millennials or Generation contributions See also 401(k) and 403(b) plan
Y - the generation born between 1980 and 2000 and often Contrast defined benefit plan
classified as the children of Baby Boomers
The Young Pragmatic and Penniless Generation | 30
401(k) plan An employer sponsored retirement plan that enables
employees to make tax-deferred contributions from their
salaries to the plan
403(b) plan An employer-sponsored defined contribution plan that
enables employees of universities public schools and
non-profit organizations to make tax-deferred contributions
from their salaries to the plan
final salary plan A type of defined benefit plan in which retirement
benefits are based on final retirement salary in the years
immediately before retirement benefits are received
Millennials A term used to refer to the people born from about 1980
to 2000 brought up using digital technology They are
often classified as the children of Baby Boomers
r etirement (or pension) plan Provides replacement for salary when a person is no
longer working due to retirement In the case of a defined
benefit retirement plan the employer or union contributes
to the plan which pays a predetermined benefit for the
rest of the employeersquos life based on length of service and
salary Payments may be made either directly or through
an annuity Retirement plan payments are taxable income
to recipients in the year received The employer or union
has fiduciary responsibility to invest the retirement plan
funds in stocks bonds real estate and other assets earn
a satisfactory rate of return and make payments to retired
workers Retirement plan funds holding trillions of dollars
are one of the largest investment forces in the stock
bond and real estate markets If the employer defaults in
the United States retirement plan payments are usually
guaranteed by the Pension Benefit Guaranty Corporation
(PBGC)
variable annuities (VA) An insurance contract in which the insurance company
guarantees a minimum payment at the end of the
accumulation period The payments may vary depending
on the financial performance of the managed portfolio
31 | The Young Pragmatic and Penniless Generation
About Aegon Transamerica Center for Retirement Studiesreg and Cicero Consulting
Aegon Transamerica Center Aegon is an international life insurance pensions and asset reg management company with businesses in over 20 markets for Retirement Studies in the Americas Europe and Asia Aegon companies employ The Transamerica Center for Retirement Studiesreg (TCRS) is
around 24000 people and serve millions of customers a division of the Transamerica Institute a nonprofit private
worldwide foundation TCRS is dedicated to educating the public on
wwwaegoncom emerging trends surrounding retirement security in the
United States TCRSrsquo research emphasizes employer-sponsored
In 2010 Aegon became a founding member of the Global retirement plans issues faced by small to mid-sized companies
Coalition on Aging which seeks to raise awareness of aging and their employees and the implications of legislative and
issues among policymakers and the general public A major aim regulatory changes Transamerica Institute is funded by
of the coalition is to transform the way we think and speak contributions from Transamerica Life Insurance Company and
about aging replacing the familiar rhetoric of lsquoproblemsrsquo with its affiliates and may receive funds from unaffiliated third-
a more positive discussion of lsquopossibilitiesrsquo and lsquoopportunitiesrsquo parties For more information about TCRS please refer to
wwwglobalcoalitiononagingcom wwwtransamericacenterorg
Cicero Consulting A leading consultancy firm serving the banking insurance and
asset management sector Cicero specializes in public policy
and communications consulting as well as global thought
leadership and independent market research Cicero was
established in 2001 and now operates from offices in London
Brussels Washington and Singapore As a market leader in
pensions and retirement research Cicero designed
and analyzed the research and contributed to the report
wwwcicero-groupcom
The Young Pragmatic and Penniless Generation | 32
Marta acebo Mark Green Patricia Plas
Paula alvarez douGlas henck scott roane
Frits bart wendel hoFMan thurstan robinson
Grace basile
lynette belFry
andrew berwick
Frans van der horst
tatsuo kai
herMan kaPPelle
Patti rowey
sarah russell
Joost van schaGen
robin boon Gaacutebor kePecs dick schiethart
bert-JaaP brons Marco keiM erik schouten
douG brooks
libby buet
kent callahan
JaiMe kirkPatrick
bas knol
roGer koch
anGela seyMour Jackson
kate sMith
renske stoker
Jeanne de cervens
dana chen
Peter kunkel
alexander kuiPers
eyleen sun
MartiJn tans
arkadiusz chMurzynski
heidi cho
brian lewis
Mike linder
GreG tucker
Mark twiGG
siMon clow siMon luke catherine wanG
robert colliGnon Jason Ma Marc van weede
catherine collinson GrzeGorz Mathea tiM willaert
wendy daniels
Michel denizot
edit drevenka
Paul Middleton
takaoh MiyaGawa
david Moulton
daniel wriGht
alex wynaendts
MacieJ zaPala
Jan driessen
kelly Fu
adrian Grace
Mark Mullin
Marcelle noltenius
stiG nybo
Peacuteter zatykoacute
vicky zeldin
Disclaimer This repor t contains general information only and does
not constitute a solicitation or offer No rights can be
derived from this repor t Aegon its par tners and any of
their affiliates or employees do not guarantee warrant
or represent the accuracy or completeness of the
information contained in the repor t
Acknowledgements
33 | The Young Pragmatic and Penniless Generation
References and notes i For a comparison of different retirement systems see lsquoPensions at a Glance 2011rsquo OECD 2011 ii As the survey was carried out online the survey results in China are based toward people living in urban areas iii ldquoPensions Marketsrdquo TheCityUK March 2013 p9 iv Global Employment Trends for Youth 2013 A generation at risk International Labour Organisation 2013 p2 v Eurostat July 2013 vi OECD Employment and Labour Markets Key Tables from OECD No 2 2012 vii The Federal Reserve Bank of New York 2012 Quarterly Report on Household Debt March 29 2013 viii World Bank ix lsquoWorld-class povertyrsquo The Economist February 27 2013
httpwwweconomistcomblogsanalects201302chinas-poor x lsquoThe Chinese slow down in char tsrsquo The Economist July 15 2013 xi lsquoChina rsquos welfare system difficult inflexible and blatantly unfairrsquo The Guardian April 23 2013
httpwwwtheguardiancomglobal-development2013apr23china-welfare-system-inflexible-unfair xii lsquo The Dutch experience with Defined Ambition pensions and the impact on companiesrsquo Aegon Global Pensions March 12 2013
httpwwwaegonglobalpensionscomenHomePublicationsNews-archiveNewsThe-Dutch-experience-with-Defined
Ambition-pensions-and-what-that-may-mean-for-companies-in-the-Netherlands-and-the-UK
shy
The Young Pragmatic and Penniless Generation | 34
Contact information HE ADQUARTER S
Aegon NV
PO Box 85
2501 CB The Hague
Telephone +31 70 344 32 10
w w waegoncom
MEDIA REL ATIONS
Telephone +31 70 344 89 56
Email gcc-iraegoncom
Countr y Index score
Germany 548
China 541
Canada 524
United States 519
The Netherlands 488
United Kingdom 486
Sweden 483
France 475
Hungar y 473
Poland 463
Spain 440
Japan 430
Total 489
Appendix 1 Aegon Retirement Readiness Index (ARRI) - technical note
Aegon Retirement Readiness Index (ARRI)-technical note 2013 Weightings (2012 in brackets) A sample of 12000 pre and post retirees was drawn from 1 Personal responsibilit y 20 (30)
twelve countries Of these 10800 (90) were pre-retirees 2 Level of awareness 30 (35)
and these were chosen for fur ther analysis of their plans 3 Financial capability Understanding 30 (25)
for retirement The Index that was developed forms an 4 Retirement planning 50 (50)
assessment of how well an individual perceives the adequacy 5 Financial preparedness 60 (60)
of his her own finances and financial awareness specifically 6 Income replacement 35 (35)
for addressing his retirement needs
Note that the weights devised to show the relative
The lsquotargetrsquo for the Index impor tance of each question in calculating the Index add to
The question on current savings activity was designated as the 225 These were then re-scaled so that a final scale of 1 to
target question (dependent variable) for predicting the level of 10 was calculated
preparedness for retirement Responses to this question were
then correlated with each of the six key questions (variables) Final scores by country below to understand which were driving the activity These weightings were multiplied by the actual scores for each
This was done because it was not felt to be correct to give respondent for each of the six Index questions and aggregated
each of the six variables described below an equal weight as to obtain a provisional score This was then adjusted to
they appeared to have quite different relationships to the give countr y scores out of 1 to 10 (A score of 1 to 10 had
target question sufficient differentiation to be used as the scale for analysis)
1 Personal responsibilit y for income in retirement
2 Level of awareness of need to plan for retirement
3 F inancial capability Understanding of financial matters
regarding plans for retirement
4 Retirement planning Level of development of plans
5 Financial preparedness for retirement
6 Income replacement Level of projected income replacement
The weighting To estimate the statistical significance of the decline in overall
scores in this yearrsquos Index is theoretically incalculable
Two things have changed from 2012 to 2013
1 C anada and China have joined the sample
2 The new countries have thus influenced the weights of
emphasis placed on the 6 variables used to calculate
the score hence the weights attached to the complex
calculation have changed
However it is noticeable that for countries which were sampled
in both time periods the mean scores for the six individual
variables have almost invariably declined and on average more
than half of them have shown a significant level of decline
In particular the question lsquoDo you think you will achieve this
incomersquo has for all countries shown a significant level of
decline We thus hypothesize that the comparative results
show a significant decline
The Young Pragmatic and Penniless Generation | 36
Net
herl
ands
Net
herl
ands
Net
herl
ands
Ger
man
yG
erm
any
Ger
man
yBase 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
Better off 7 4 23 Sw
eden
Swed
en11 5 7 8 3 11 14 50 5
Swed
en
About the same 19 18 27 23 8 19 18 13 29 29 24 21 U
ntie
dU
ntie
dU
nite
d Worse off 66 74 41 58 79 69 71 76 51 47 21 55
Kin
gdom
Kin
gdom
Kin
gdom
Donrsquot know 9 3 9 9 9 4 4 8 9 10 6 19
Fran
ceFr
ance
Fran
ce
Chart 2 Education of 20 ndash 29 year olds by country Q Please choose from the following list the highest level of educational or professional qualification you have
Spai
nSp
ain
Spa
in
Pol
and
Pol
and
Pol
and
Hun
gary
Hun
gary
Hun
gar y
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
dU
nite
d 100 100 100 100 100 100 100 100 100
Stat
es100 100 100
Stat
esSt
ates
Less than high school graduate 2 44 6 14 1 3 2 7 1 3 Ca
nada
Cana
daC
anad
aHigh school graduate 11 33 53 23 22 22 4 41 14 21 1 2
Some college or trade school 46 2 9 9 9 19 37 14 28 20 4 33 Ch
ina
Chin
aC
hina
College degree University degree 31 15 27 30 41 43 21 33 50 46 9 57
Postgraduate degree or 8 3 3 23 25 11 36 1 8 9 80 6 qualification Ja
pan
Japa
n Ja
pan
Other 2 4 1 1 1 2 0 5 0 6 2
None 0 1 1 0 1 0 0
NET Less than undergrad degree 61 82 70 47 34 46 43 66 42 45 11 37
NET Undergrad degree or higher 39 18 30 53 66 54 57 34 58 55 89 63
Chart 3 Aegon Retirement Readiness Index scores for young employees by country
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
NET Low Index (0-5) 80 64 79 81 85 78 81 73 65 61 61 87
NET Medium Index (6-7) 15 30 18 15 14 21 17 23 25 31 31 12
NET High Index (8-10) 4 6 3 3 1 2 2 4 10 8 7 1
Appendix 2 Country comparisons Chart 1 The majority of young employees believe that they will be worse off in retirement compared to their parents Q Do you think that future generations of retirees will be better off or worse off than those currently in retirement
37 | The Young Pragmatic and Penniless Generation
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsI always make sure that 27 34 27 26 17 14 19 22 35 33 32 20 I am saving for retirement
I only save for retirement G
erm
any
Ger
man
y21 27 20 13 17 21 16 6 17 24 20 24 occasionally from time to time
I am not saving for retirement now 6 11 8 11 5 15 9 4 10 8 9 5 although I have in the past Sw
eden
Swed
en
I am not saving for retirement 35 23 34 46 53 40 49 54 36 33 38 46 though I do intend to U
nite
dU
ntie
dK
ingd
omK
ingd
om I have never saved for retirement and 11 6 10 5 8 10 6 13 3 2 1 6 donrsquot intend to
Fran
ceFr
ance
Chart 5 Younger people are more likely not to be using any means of retirement savings Sp
ain
Spai
nQ Which financial means if any are you currently using to prepare for your retirement
Pol
and
Pol
and
only asked in Germany only asked in Spain
Hun
gary
Hun
gary
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
dSt
ates
Stat
es100 100 100 100 100 100 100 100 100 100 100 100
Defined benefit plan 16 10 25 29 15 3 76 11 20 13 5 Ca
nada
Cana
daDefined contribution plan 28 10 17 19 19 14 10 23 40 7 3
Private pension 8 18 14 10 5 9 4 13 12 40 66 4 Ch
ina
Chin
a Government pension social security 12 43 14 21 8 7 4 18 27 33 71 35
Stocks 5 12 14 7 4 17 7 2 13 10 23 9
Bonds 1 8 5 6 2 16 4 2 8 13 14 3 Ja
pan
Japa
n
Mutual funds 2 14 23 4 2 10 3 4 7 16 9 6
Investment insurances (annuities) 2 3 2 3 2 9 4 5 2 4 6 1
Savings accounts 23 37 38 25 23 6 29 15 36 37 65 36
Investment property 2 10 6 7 9 2 5 2 5 11 18 1
Employee stock purchase 1 1 1 4 1 29 0 4 1 7 1
My home 10 5 8 7 7 8 4 6 6 14 30 1
Reverse mortgage 1 4 2 4
My business 2 1 3 2 2 4 1 1 2 4 12 1
Inheritance 3 11 7 11 7 9 9 8 7 9 6 2
Annuities 1 15 2 2 1 4 3 2 1 2 8
Long-term care insurance 2 1 3 2 9 5 1 6 4 7 1
Life insurance 6 11 8 8 14 3 18 15 19 18 36 17
Unterstuumltzungskasse aus 2 Eigenmitteln finanziert
Unterstuumltzungskasse vom 2 Arbeitgeber finanziert
Chart 4 Younger employees are much more likely to aspire to save for retirement Which of the following best explains your approach to saving for retirement This can include money you contribute to any long-term
investment including pensions stocks and shares investment-linked insurances property etc
Q
The Young Pragmatic and Penniless Generation | 38
Plan de empleo mixto 2 (combinacioacuten de las dos anteriores)
Other 1 6 4 0 1 2 2 3 2 2 3 3
None nothing 8 14 12 23 25 31 6 27 21 17 3 24
Donrsquot know 29 6 17 13 19 8 4 9 7 7 0 9
hart 6 The younger generation has more negative associations of retirement Which if any of the following words do you most associate with retirement
Net
herl
ands
Net
herl
ands
Ger
man
yG
erm
any
Swed
enSw
eden
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
d100 100 100 100 100 100 100 100 100 100 100 100
Kin
gdom
Kin
gdom
Freedom 35 32 36 39 19 26 11 20 35 40 37 33
Opportunity 7 27 25 18 4 8 9 10 17 16 9 16 Fr
ance
Fran
ceLeisure 58 48 36 41 23 24 43 32 50 50 55 6
Excitement 2 5 3 8 2 6 1 2 17 17 4 3 Sp
ain
Spai
nPoverty 11 26 23 11 26 14 37 44 7 5 6 20
Insecurity 34 24 18 16 20 18 35 56 10 9 18 44 P
olan
dP
olan
dLoneliness 4 10 17 16 12 7 11 8 5 9 20 12
Ill health 2 19 7 14 15 9 49 23 6 6 29 11 H
unga
ryH
unga
ryDependent on others 11 11 5 18 14 8 18 19 14 6 11 4
Tired 3 4 8 10 14 10 17 6 7 7 13 19 U
nite
dU
nite
dFar away 38 19 25 21 61 32 2 13 33
Stat
es33 14 22
Stat
es
Boredom 14 16 6 12 16 12 15 8 12 12 16 17 Ca
nada
Cana
daEnjoyment 21 16 17 23 14 29 5 3 37 37 35 15
None of the above 0 1 1 2 0 2 1 1 2 2 1 2
Donrsquot know 2 2 3 3 2 2 1 2 0 Ch
ina
6 Ch
ina
hart 7 Many young employees think they are not on course to achieve target retirement income Ja
pan
Japa
n Do you think you will achieve this income [your estimated income needed in retirement]
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
I donrsquot know if I am on course to 56 37 57 59 50 39 49 48 48 41 22 68 achieve my retirement income
No I am on course to achieve around one-quarter (25) of my 10 14 9 13 15 14 14 13 10 10 10 7 retirement income
No I am on course to achieve around 12 20 14 11 19 19 18 15 12 11 23 12 half of my retirement income
No I am on course to achieve around three-quarters (75) of my 8 14 7 4 8 15 9 8 6 11 20 5 retirement income
Yes I am on course to achieve my 15 15 13 14 8 13 11 17 25 27 25 8 retirement income
CQ
CQ
39 | The Young Pragmatic and Penniless Generation
Chart 8 Young people in most countries expect to retire before 65 Q At what age do you expect to retire from all paid employment
Net
herl
ands
Ger
man
y
Swed
en
Uni
ted
Kin
gdom
Fran
ce
Spai
n
Pol
and
Hun
gary
Uni
ted
Stat
es
Cana
da
Chin
a
Japa
n
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
40 or under 0 1 1 0 0 1 3 1 5 12
41-50 1 2 3 5 2 2 6 3 9 4 37 9
51-59 4 4 4 6 2 4 11 5 7 10 30 1
60 5 11 8 12 10 13 19 12 12 16 21 27
61-64 2 11 10 2 20 7 4 13 5 3 1 2
65 17 22 44 31 34 32 16 26 26 32 3 25
66-69 42 32 15 9 12 29 20 13 9 9 0 1
70 19 11 10 18 10 5 10 9 13 12 0 6
71+ 5 5 5 9 4 5 5 3 7 5 1 4
Never 2 1 1 2 2 2 6 4 1 0 0
Donrsquot know 2 3 2 5 3 2 8 9 5 5 1 13
Mean 67 65 65 65 64 65 63 64 63 64 53 59
Median 67 65 65 65 65 65 65 65 65 65 55 60
Chart 9 Younger employees feel they donrsquot have money to invest for retirement Q What is the single biggest obstacle to you saving for retirement right now
Net
herl
ands
Ger
man
y
Swed
en
Uni
ted
Kin
gdom
Fran
ce
Spai
n
Pol
and
Hun
gary
Uni
ted
Stat
es
Cana
da
Chin
a
Japa
n
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
The uncertain economic environment 19 8 13 9 13 19 11 14 12 9 29 27
Lack of money to invest 28 41 33 43 47 34 48 55 47 50 6 19
Fear of poor investment returns over the coming years 2 5 10 7 5 6 8 2 6 8 14 6
Complexity of investment products 4 4 4 3 5 3 5 2 12 5
I donrsquot know how to go about investing for the long-term 2 3 10 8 5 5 3 3 6 8 7 9
The fees charged by financial services companies 2 4 4 2 4 3 4 2 3 5 2 5
I canrsquot afford to take financial advice 3 3 6 8 2 4 3 5 3 2 3 2
I donrsquot trust the financial services industry 12 11 8 6 5 10 6 2 2 3 5 4
I donrsquot see the need to save for the long-term 6 1 2 2 3 3 3 1 2 1 4 3
Concerns about unstable currencies currency fluctuations 2 5 1 3 3 3 4 3 4 5 15 2
Other (PLEASE STATE) 3 3 1 1 3 2 4 6 2 2 1
Donrsquot know 17 12 11 7 8 6 3 6 8 6 3 17
The Young Pragmatic and Penniless Generation | 40
Chart 10 More money would incentivize young employees to save for retirement Q Which if any of the following would encourage you to save for retirement
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsMore generous tax breaks on long-term savings and pensions 20 44 30 32 27 23 42 42 33 43 40 32 products
Ger
man
yG
erm
any
Access to financial education so that I am more aware of what 24 6 14 21 16 22 21 12 23 24 43 25 I need to do for myself
Swed
enSw
eden
Access to professional financial advice so that I have personalized
Uni
ted
20 24 23 23 15 21 25 9 22 23 44 13 U
nite
drecommendations on what steps
Kin
gdom
Kin
gdom
I need to take
Simpler investment products that 12 33 19 28 20 Fr
ance
18 27 16 32 28 36 10 Fr
ance
I can understand with less jargon
Better and more frequent information about my retirement 16 28 20 27 27 23
Spai
n20 18 25 31 45 22
Spai
nsavings
Better legal protection in case I am 12 18 13 18 10 24 18 13 13 19 21 6 P
olan
dP
olan
dsold the wrong product
A pay rise 46 54 44 64 55 50 70 72 67 64 53 37
A better retirement plan pension H
unga
ryH
unga
ry27 32 25 33 29 26 42 35 39 44 33 32 match from my employer
Other 4 2 1 1 2 2 3 3 2 U
nite
d3 0
Uni
ted
Stat
esSt
ates
Donrsquot know 17 9 16 10 10 12 3 8 8 5 3 17
Not applicable - I already have 3 3 4 2 2 1 1 1 2 2 3 sufficient savings Ca
nada
Cana
da
Chin
aCh
ina
Chart 11 A majority of younger employees do not have a written plan for retirement Q Which of the following best describes your retirement planning strategy
Japa
n Ja
pan
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
I have a written plan 7 18 10 9 6 8 6 5 13 10 8 4
I have a plan but it is not written 24 47 37 25 23 31 29 31 37 44 55 24
down
I do not have a plan 61 32 51 61 62 55 62 58 45 42 34 61
Donrsquot know 7 3 3 5 8 6 3 6 4 4 3 12
41 | The Young Pragmatic and Penniless Generation
Chart 12 For young employees friends and family are the leading source of retirement savings information Q And which of these sources (of information) is most important to you
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
Bank adviser 6 11 19 5 25 5 7 4 3 17 10 2 N
ethe
rlan
dsN
ethe
rlan
dsProfessional financial adviser 12 22 10 12 10 19 19 22 21 25 19 10
Insurance agent spokesperson 3 10 2 3 1 3 6 2 3 0 3 2 G
erm
any
Ger
man
yInsurance company website 3 1 3 2 4 4 2 2 1 3 1
Personal finance websites online 8 5 7 8 5 4 10 8 12 6 10 8 retirement planning tools Sw
eden
Swed
enPersonal finance media 2 2 2 2 2 6 3 1 2 1 6 2
Government website 7 1 3 6 U
nite
d5 2 3 3 2 3 7 1
Uni
ted
Kin
gdom
Kin
gdom
Bank website 2 3 3 2 1 0 3 2 1 6 3 3
My employer 12 8 4 9 4 7 5 12 8 5 4 1 Fr
ance
Fran
ceAccountant 2 6 4 4 1 3 1 3 5 5 1 3
Lawyer 2 3 1 2 2 8 4 2 1 2 2 0 Sp
ain
Spai
nFriends and family 21 22 30 28 24 26 18 24 26 20 25 24
None of these P
olan
dP
olan
dNot applicable 21 7 16 18 19 13 17 15 14 9 5 41
Hun
gary
Hun
gary
Chart 13 Most young workers feel their employer should provide some kind of pension Q In the future what if anything should employers do to help people plan for retirement
Uni
ted
Uni
ted
Stat
esSt
ates
Cana
daCa
nada
Chin
aCh
ina
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 Ja
pan
Japa
n Employers should be required to 24 43 20 40 21 26 20 28 37 34 20 30 contribute to workersrsquo pensions
Employers should be required to make a pension available but not to 12 13 7 17 20 15 15 4 11 14 22 5 contribute into it
Employers should not be required to provide pensions but should 15 9 12 8 9 8 11 6 11 9 9 11 provide information on how to plan for retirement
Employers should provide a range of flexible benefits and 13 18 18 16 15 27 25 28 21 22 45 12 allow individuals to choose which benefits they actually want
Nothing ndash it should be left to individual employees to take care 2 2 5 1 4 3 3 5 6 5 1 9 of themselves
Nothing ndash it should be left to the government to take care of its 2 5 5 2 5 8 15 14 1 4 0 4 citizens
Donrsquot know 30 10 32 17 27 12 12 15 13 13 3 29
The Young Pragmatic and Penniless Generation | 42
Chart 14 Workplace pensions are relatively low down in young workersrsquo priorities when choosing a job Q How important to you would the following workplace benefits be if you were choosing your next job
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsBasic salary 86 93 88 91 88 92 90 94 90 93 96 94
Holiday entitlement 87 94 89 91 92 94 91 94 93 94 96 91 G
erm
any
Ger
man
yOvertime and bonus pay 86 93 87 88 89 90 89 94 90 91 97 90
Location of workplace 88 91 86 92 89 90 89 92 93 93 92 86 Sw
eden
Swed
enMedical health insurance 73 92 84 65 86 87 88 87 93 94 98 83
Opportunities for career progression 86 91 81 90 90 94 91 94 92 91 96 81 U
nite
dU
nite
dAccess to a workplace retirement 85 85 81 82
Kin
gdom
78 84 80 78 84 86 93 74 K
ingd
omplan with employer contributions
Access to good training provision 85 87 85 88 86 91 85 93 86 90 95 74 Fr
ance
Fran
ceFlexible working hours 79 87 58 86 81 89 81 87 91 91 92 57
Life insurance 72 75 79 69 80 82 Sp
ain
84 80 81 88 93 74 Sp
ain
(death in service benefits)
Phased retirement or other employer programs providing for 74 54 75 71 72 81 76 74 76 81 91 65
Pol
and
Pol
and
a transition into retirement
Ability to work past the normal 68 57 64 65 64 74 72 65 74 76 80 70 retirement age H
unga
ryH
unga
ry
Access to a workplace retirement 62 74 61 68 59 77 61 47 68 74 89 65 plan without employer contributions U
nite
dU
nite
dSt
ates
Stat
esEmployee share plans 50 72 54 65 59 73 61 51 64 73 91 55
Access to creche help with the 67 75 64 56 69 79 75 83 58 69 89 68 cost of childcare Ca
nada
Cana
da
Opportunities for foreign travel 53 54 60 55 50 71 58 66 57 61 79 37
Company car 51 46 45 47 49 63 51 49 36 49 69 Ch
ina
39 Ch
ina
Japa
n Ja
pan
Chart 15 Young workers think the state pension will need to be reformed Q With the cost of government pensions becoming a greater concern as people live longer which if any of the following do you think
the government should undertake
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
The government should reduce the overall cost of state pension 15 33 16 15 16 20 28 22 21 26 30 16 provision by reducing the value of individual pension plans
The government should increase overall funding available for the 12 21 30 22 14 34 19 26 21 18 29 10 state pension through raising taxes
43 | The Young Pragmatic and Penniless Generation
he government should take a alanced approach with some 27 26 12 30 28 23 24 16 34 31 38 41 eductions in individual payments nd some increases in tax
he government should not do nything State pension provision 7 2 12 5 3 4 3 3 5 4 0 5 ill remain perfectly affordable in he future
onrsquot know 38 19 29 29 39 20 26 34 19 21 4 28
Net
herl
ands
art 16 Products which protect against investment risk are the most important to young workers ( interested) Thinking about the types of financial products you could purchase to help provide you with security in retirement on a scale of 1 to 5
how interested are you in the following options G
erm
any
Swed
en
Uni
ted
Kin
gdom
ase 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 Fr
ance
100 100 100 100 100 100 100 100 100 100 100 100
product providing a guaranteed etirement income stream or 75 81 73 76 74 83 78 76 87 85 94 69
Spai
nifetime income in retirement
product which protects my 74 79 73 76 72 82 77 74 84 86 94 65 etirement income against inflation P
olan
d
product which guarantees that I 72 82 73 78 75 81 76 73 86 86 90 67 onrsquot lose my initial investment H
unga
ry product which helps meet the ost of long-term care if I become 74 79 74 77 70 79 76 71 86 85 84 66
Uni
ted
nable to look after myself St
ates
product which protects my capital 71 81 71 76 68 76 77 73 84 83 93 65 rom poor investment returns Ca
nada
product which generates a etirement income and allows 69 78 71 75 68 81 77 72 84 86 94 70 e to take a lump sum from the
Chin
anvestment should I need to
product where the annual 66 78 68 75 72 79 77 70 85 86 87 64 anagement charges are kept low Ja
pan
product which enables me to eep some control over how my 71 73 70 75 72 80 75 69 88 85 91 63 avings are invested during my etirement
product which manages the sset allocation so that I am never 68 70 67 73 66 76 71 67 80 83 95 60 xposed to a level of risk Irsquom not omfortable with
product which continues to rovide a retirement income to my 74 78 71 75 73 81 79 73 86 82 94 60 pouse in the event that I die first
product which protects my family gainst having to pay estate taxes 73 76 71 74 75 81 75 69 82 82 89 56 hen I die
product which locks in investment 72 71 63 73 64 71 59 56 81 84 89 61 eturns during the good years
Tbra
Tawt
D
ChQ
B
Arl
Ar
Ad
Acu
Af
Armi
Am
Aksr
Aaec
Aps
Aaw
Ar
The Young Pragmatic and Penniless Generation | 44
401(k) plan An employer sponsored retirement plan that enables
employees to make tax-deferred contributions from their
salaries to the plan
403(b) plan An employer-sponsored defined contribution plan that
enables employees of universities public schools and
non-profit organizations to make tax-deferred contributions
from their salaries to the plan
final salary plan A type of defined benefit plan in which retirement
benefits are based on final retirement salary in the years
immediately before retirement benefits are received
Millennials A term used to refer to the people born from about 1980
to 2000 brought up using digital technology They are
often classified as the children of Baby Boomers
r etirement (or pension) plan Provides replacement for salary when a person is no
longer working due to retirement In the case of a defined
benefit retirement plan the employer or union contributes
to the plan which pays a predetermined benefit for the
rest of the employeersquos life based on length of service and
salary Payments may be made either directly or through
an annuity Retirement plan payments are taxable income
to recipients in the year received The employer or union
has fiduciary responsibility to invest the retirement plan
funds in stocks bonds real estate and other assets earn
a satisfactory rate of return and make payments to retired
workers Retirement plan funds holding trillions of dollars
are one of the largest investment forces in the stock
bond and real estate markets If the employer defaults in
the United States retirement plan payments are usually
guaranteed by the Pension Benefit Guaranty Corporation
(PBGC)
variable annuities (VA) An insurance contract in which the insurance company
guarantees a minimum payment at the end of the
accumulation period The payments may vary depending
on the financial performance of the managed portfolio
31 | The Young Pragmatic and Penniless Generation
About Aegon Transamerica Center for Retirement Studiesreg and Cicero Consulting
Aegon Transamerica Center Aegon is an international life insurance pensions and asset reg management company with businesses in over 20 markets for Retirement Studies in the Americas Europe and Asia Aegon companies employ The Transamerica Center for Retirement Studiesreg (TCRS) is
around 24000 people and serve millions of customers a division of the Transamerica Institute a nonprofit private
worldwide foundation TCRS is dedicated to educating the public on
wwwaegoncom emerging trends surrounding retirement security in the
United States TCRSrsquo research emphasizes employer-sponsored
In 2010 Aegon became a founding member of the Global retirement plans issues faced by small to mid-sized companies
Coalition on Aging which seeks to raise awareness of aging and their employees and the implications of legislative and
issues among policymakers and the general public A major aim regulatory changes Transamerica Institute is funded by
of the coalition is to transform the way we think and speak contributions from Transamerica Life Insurance Company and
about aging replacing the familiar rhetoric of lsquoproblemsrsquo with its affiliates and may receive funds from unaffiliated third-
a more positive discussion of lsquopossibilitiesrsquo and lsquoopportunitiesrsquo parties For more information about TCRS please refer to
wwwglobalcoalitiononagingcom wwwtransamericacenterorg
Cicero Consulting A leading consultancy firm serving the banking insurance and
asset management sector Cicero specializes in public policy
and communications consulting as well as global thought
leadership and independent market research Cicero was
established in 2001 and now operates from offices in London
Brussels Washington and Singapore As a market leader in
pensions and retirement research Cicero designed
and analyzed the research and contributed to the report
wwwcicero-groupcom
The Young Pragmatic and Penniless Generation | 32
Marta acebo Mark Green Patricia Plas
Paula alvarez douGlas henck scott roane
Frits bart wendel hoFMan thurstan robinson
Grace basile
lynette belFry
andrew berwick
Frans van der horst
tatsuo kai
herMan kaPPelle
Patti rowey
sarah russell
Joost van schaGen
robin boon Gaacutebor kePecs dick schiethart
bert-JaaP brons Marco keiM erik schouten
douG brooks
libby buet
kent callahan
JaiMe kirkPatrick
bas knol
roGer koch
anGela seyMour Jackson
kate sMith
renske stoker
Jeanne de cervens
dana chen
Peter kunkel
alexander kuiPers
eyleen sun
MartiJn tans
arkadiusz chMurzynski
heidi cho
brian lewis
Mike linder
GreG tucker
Mark twiGG
siMon clow siMon luke catherine wanG
robert colliGnon Jason Ma Marc van weede
catherine collinson GrzeGorz Mathea tiM willaert
wendy daniels
Michel denizot
edit drevenka
Paul Middleton
takaoh MiyaGawa
david Moulton
daniel wriGht
alex wynaendts
MacieJ zaPala
Jan driessen
kelly Fu
adrian Grace
Mark Mullin
Marcelle noltenius
stiG nybo
Peacuteter zatykoacute
vicky zeldin
Disclaimer This repor t contains general information only and does
not constitute a solicitation or offer No rights can be
derived from this repor t Aegon its par tners and any of
their affiliates or employees do not guarantee warrant
or represent the accuracy or completeness of the
information contained in the repor t
Acknowledgements
33 | The Young Pragmatic and Penniless Generation
References and notes i For a comparison of different retirement systems see lsquoPensions at a Glance 2011rsquo OECD 2011 ii As the survey was carried out online the survey results in China are based toward people living in urban areas iii ldquoPensions Marketsrdquo TheCityUK March 2013 p9 iv Global Employment Trends for Youth 2013 A generation at risk International Labour Organisation 2013 p2 v Eurostat July 2013 vi OECD Employment and Labour Markets Key Tables from OECD No 2 2012 vii The Federal Reserve Bank of New York 2012 Quarterly Report on Household Debt March 29 2013 viii World Bank ix lsquoWorld-class povertyrsquo The Economist February 27 2013
httpwwweconomistcomblogsanalects201302chinas-poor x lsquoThe Chinese slow down in char tsrsquo The Economist July 15 2013 xi lsquoChina rsquos welfare system difficult inflexible and blatantly unfairrsquo The Guardian April 23 2013
httpwwwtheguardiancomglobal-development2013apr23china-welfare-system-inflexible-unfair xii lsquo The Dutch experience with Defined Ambition pensions and the impact on companiesrsquo Aegon Global Pensions March 12 2013
httpwwwaegonglobalpensionscomenHomePublicationsNews-archiveNewsThe-Dutch-experience-with-Defined
Ambition-pensions-and-what-that-may-mean-for-companies-in-the-Netherlands-and-the-UK
shy
The Young Pragmatic and Penniless Generation | 34
Contact information HE ADQUARTER S
Aegon NV
PO Box 85
2501 CB The Hague
Telephone +31 70 344 32 10
w w waegoncom
MEDIA REL ATIONS
Telephone +31 70 344 89 56
Email gcc-iraegoncom
Countr y Index score
Germany 548
China 541
Canada 524
United States 519
The Netherlands 488
United Kingdom 486
Sweden 483
France 475
Hungar y 473
Poland 463
Spain 440
Japan 430
Total 489
Appendix 1 Aegon Retirement Readiness Index (ARRI) - technical note
Aegon Retirement Readiness Index (ARRI)-technical note 2013 Weightings (2012 in brackets) A sample of 12000 pre and post retirees was drawn from 1 Personal responsibilit y 20 (30)
twelve countries Of these 10800 (90) were pre-retirees 2 Level of awareness 30 (35)
and these were chosen for fur ther analysis of their plans 3 Financial capability Understanding 30 (25)
for retirement The Index that was developed forms an 4 Retirement planning 50 (50)
assessment of how well an individual perceives the adequacy 5 Financial preparedness 60 (60)
of his her own finances and financial awareness specifically 6 Income replacement 35 (35)
for addressing his retirement needs
Note that the weights devised to show the relative
The lsquotargetrsquo for the Index impor tance of each question in calculating the Index add to
The question on current savings activity was designated as the 225 These were then re-scaled so that a final scale of 1 to
target question (dependent variable) for predicting the level of 10 was calculated
preparedness for retirement Responses to this question were
then correlated with each of the six key questions (variables) Final scores by country below to understand which were driving the activity These weightings were multiplied by the actual scores for each
This was done because it was not felt to be correct to give respondent for each of the six Index questions and aggregated
each of the six variables described below an equal weight as to obtain a provisional score This was then adjusted to
they appeared to have quite different relationships to the give countr y scores out of 1 to 10 (A score of 1 to 10 had
target question sufficient differentiation to be used as the scale for analysis)
1 Personal responsibilit y for income in retirement
2 Level of awareness of need to plan for retirement
3 F inancial capability Understanding of financial matters
regarding plans for retirement
4 Retirement planning Level of development of plans
5 Financial preparedness for retirement
6 Income replacement Level of projected income replacement
The weighting To estimate the statistical significance of the decline in overall
scores in this yearrsquos Index is theoretically incalculable
Two things have changed from 2012 to 2013
1 C anada and China have joined the sample
2 The new countries have thus influenced the weights of
emphasis placed on the 6 variables used to calculate
the score hence the weights attached to the complex
calculation have changed
However it is noticeable that for countries which were sampled
in both time periods the mean scores for the six individual
variables have almost invariably declined and on average more
than half of them have shown a significant level of decline
In particular the question lsquoDo you think you will achieve this
incomersquo has for all countries shown a significant level of
decline We thus hypothesize that the comparative results
show a significant decline
The Young Pragmatic and Penniless Generation | 36
Net
herl
ands
Net
herl
ands
Net
herl
ands
Ger
man
yG
erm
any
Ger
man
yBase 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
Better off 7 4 23 Sw
eden
Swed
en11 5 7 8 3 11 14 50 5
Swed
en
About the same 19 18 27 23 8 19 18 13 29 29 24 21 U
ntie
dU
ntie
dU
nite
d Worse off 66 74 41 58 79 69 71 76 51 47 21 55
Kin
gdom
Kin
gdom
Kin
gdom
Donrsquot know 9 3 9 9 9 4 4 8 9 10 6 19
Fran
ceFr
ance
Fran
ce
Chart 2 Education of 20 ndash 29 year olds by country Q Please choose from the following list the highest level of educational or professional qualification you have
Spai
nSp
ain
Spa
in
Pol
and
Pol
and
Pol
and
Hun
gary
Hun
gary
Hun
gar y
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
dU
nite
d 100 100 100 100 100 100 100 100 100
Stat
es100 100 100
Stat
esSt
ates
Less than high school graduate 2 44 6 14 1 3 2 7 1 3 Ca
nada
Cana
daC
anad
aHigh school graduate 11 33 53 23 22 22 4 41 14 21 1 2
Some college or trade school 46 2 9 9 9 19 37 14 28 20 4 33 Ch
ina
Chin
aC
hina
College degree University degree 31 15 27 30 41 43 21 33 50 46 9 57
Postgraduate degree or 8 3 3 23 25 11 36 1 8 9 80 6 qualification Ja
pan
Japa
n Ja
pan
Other 2 4 1 1 1 2 0 5 0 6 2
None 0 1 1 0 1 0 0
NET Less than undergrad degree 61 82 70 47 34 46 43 66 42 45 11 37
NET Undergrad degree or higher 39 18 30 53 66 54 57 34 58 55 89 63
Chart 3 Aegon Retirement Readiness Index scores for young employees by country
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
NET Low Index (0-5) 80 64 79 81 85 78 81 73 65 61 61 87
NET Medium Index (6-7) 15 30 18 15 14 21 17 23 25 31 31 12
NET High Index (8-10) 4 6 3 3 1 2 2 4 10 8 7 1
Appendix 2 Country comparisons Chart 1 The majority of young employees believe that they will be worse off in retirement compared to their parents Q Do you think that future generations of retirees will be better off or worse off than those currently in retirement
37 | The Young Pragmatic and Penniless Generation
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsI always make sure that 27 34 27 26 17 14 19 22 35 33 32 20 I am saving for retirement
I only save for retirement G
erm
any
Ger
man
y21 27 20 13 17 21 16 6 17 24 20 24 occasionally from time to time
I am not saving for retirement now 6 11 8 11 5 15 9 4 10 8 9 5 although I have in the past Sw
eden
Swed
en
I am not saving for retirement 35 23 34 46 53 40 49 54 36 33 38 46 though I do intend to U
nite
dU
ntie
dK
ingd
omK
ingd
om I have never saved for retirement and 11 6 10 5 8 10 6 13 3 2 1 6 donrsquot intend to
Fran
ceFr
ance
Chart 5 Younger people are more likely not to be using any means of retirement savings Sp
ain
Spai
nQ Which financial means if any are you currently using to prepare for your retirement
Pol
and
Pol
and
only asked in Germany only asked in Spain
Hun
gary
Hun
gary
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
dSt
ates
Stat
es100 100 100 100 100 100 100 100 100 100 100 100
Defined benefit plan 16 10 25 29 15 3 76 11 20 13 5 Ca
nada
Cana
daDefined contribution plan 28 10 17 19 19 14 10 23 40 7 3
Private pension 8 18 14 10 5 9 4 13 12 40 66 4 Ch
ina
Chin
a Government pension social security 12 43 14 21 8 7 4 18 27 33 71 35
Stocks 5 12 14 7 4 17 7 2 13 10 23 9
Bonds 1 8 5 6 2 16 4 2 8 13 14 3 Ja
pan
Japa
n
Mutual funds 2 14 23 4 2 10 3 4 7 16 9 6
Investment insurances (annuities) 2 3 2 3 2 9 4 5 2 4 6 1
Savings accounts 23 37 38 25 23 6 29 15 36 37 65 36
Investment property 2 10 6 7 9 2 5 2 5 11 18 1
Employee stock purchase 1 1 1 4 1 29 0 4 1 7 1
My home 10 5 8 7 7 8 4 6 6 14 30 1
Reverse mortgage 1 4 2 4
My business 2 1 3 2 2 4 1 1 2 4 12 1
Inheritance 3 11 7 11 7 9 9 8 7 9 6 2
Annuities 1 15 2 2 1 4 3 2 1 2 8
Long-term care insurance 2 1 3 2 9 5 1 6 4 7 1
Life insurance 6 11 8 8 14 3 18 15 19 18 36 17
Unterstuumltzungskasse aus 2 Eigenmitteln finanziert
Unterstuumltzungskasse vom 2 Arbeitgeber finanziert
Chart 4 Younger employees are much more likely to aspire to save for retirement Which of the following best explains your approach to saving for retirement This can include money you contribute to any long-term
investment including pensions stocks and shares investment-linked insurances property etc
Q
The Young Pragmatic and Penniless Generation | 38
Plan de empleo mixto 2 (combinacioacuten de las dos anteriores)
Other 1 6 4 0 1 2 2 3 2 2 3 3
None nothing 8 14 12 23 25 31 6 27 21 17 3 24
Donrsquot know 29 6 17 13 19 8 4 9 7 7 0 9
hart 6 The younger generation has more negative associations of retirement Which if any of the following words do you most associate with retirement
Net
herl
ands
Net
herl
ands
Ger
man
yG
erm
any
Swed
enSw
eden
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
d100 100 100 100 100 100 100 100 100 100 100 100
Kin
gdom
Kin
gdom
Freedom 35 32 36 39 19 26 11 20 35 40 37 33
Opportunity 7 27 25 18 4 8 9 10 17 16 9 16 Fr
ance
Fran
ceLeisure 58 48 36 41 23 24 43 32 50 50 55 6
Excitement 2 5 3 8 2 6 1 2 17 17 4 3 Sp
ain
Spai
nPoverty 11 26 23 11 26 14 37 44 7 5 6 20
Insecurity 34 24 18 16 20 18 35 56 10 9 18 44 P
olan
dP
olan
dLoneliness 4 10 17 16 12 7 11 8 5 9 20 12
Ill health 2 19 7 14 15 9 49 23 6 6 29 11 H
unga
ryH
unga
ryDependent on others 11 11 5 18 14 8 18 19 14 6 11 4
Tired 3 4 8 10 14 10 17 6 7 7 13 19 U
nite
dU
nite
dFar away 38 19 25 21 61 32 2 13 33
Stat
es33 14 22
Stat
es
Boredom 14 16 6 12 16 12 15 8 12 12 16 17 Ca
nada
Cana
daEnjoyment 21 16 17 23 14 29 5 3 37 37 35 15
None of the above 0 1 1 2 0 2 1 1 2 2 1 2
Donrsquot know 2 2 3 3 2 2 1 2 0 Ch
ina
6 Ch
ina
hart 7 Many young employees think they are not on course to achieve target retirement income Ja
pan
Japa
n Do you think you will achieve this income [your estimated income needed in retirement]
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
I donrsquot know if I am on course to 56 37 57 59 50 39 49 48 48 41 22 68 achieve my retirement income
No I am on course to achieve around one-quarter (25) of my 10 14 9 13 15 14 14 13 10 10 10 7 retirement income
No I am on course to achieve around 12 20 14 11 19 19 18 15 12 11 23 12 half of my retirement income
No I am on course to achieve around three-quarters (75) of my 8 14 7 4 8 15 9 8 6 11 20 5 retirement income
Yes I am on course to achieve my 15 15 13 14 8 13 11 17 25 27 25 8 retirement income
CQ
CQ
39 | The Young Pragmatic and Penniless Generation
Chart 8 Young people in most countries expect to retire before 65 Q At what age do you expect to retire from all paid employment
Net
herl
ands
Ger
man
y
Swed
en
Uni
ted
Kin
gdom
Fran
ce
Spai
n
Pol
and
Hun
gary
Uni
ted
Stat
es
Cana
da
Chin
a
Japa
n
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
40 or under 0 1 1 0 0 1 3 1 5 12
41-50 1 2 3 5 2 2 6 3 9 4 37 9
51-59 4 4 4 6 2 4 11 5 7 10 30 1
60 5 11 8 12 10 13 19 12 12 16 21 27
61-64 2 11 10 2 20 7 4 13 5 3 1 2
65 17 22 44 31 34 32 16 26 26 32 3 25
66-69 42 32 15 9 12 29 20 13 9 9 0 1
70 19 11 10 18 10 5 10 9 13 12 0 6
71+ 5 5 5 9 4 5 5 3 7 5 1 4
Never 2 1 1 2 2 2 6 4 1 0 0
Donrsquot know 2 3 2 5 3 2 8 9 5 5 1 13
Mean 67 65 65 65 64 65 63 64 63 64 53 59
Median 67 65 65 65 65 65 65 65 65 65 55 60
Chart 9 Younger employees feel they donrsquot have money to invest for retirement Q What is the single biggest obstacle to you saving for retirement right now
Net
herl
ands
Ger
man
y
Swed
en
Uni
ted
Kin
gdom
Fran
ce
Spai
n
Pol
and
Hun
gary
Uni
ted
Stat
es
Cana
da
Chin
a
Japa
n
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
The uncertain economic environment 19 8 13 9 13 19 11 14 12 9 29 27
Lack of money to invest 28 41 33 43 47 34 48 55 47 50 6 19
Fear of poor investment returns over the coming years 2 5 10 7 5 6 8 2 6 8 14 6
Complexity of investment products 4 4 4 3 5 3 5 2 12 5
I donrsquot know how to go about investing for the long-term 2 3 10 8 5 5 3 3 6 8 7 9
The fees charged by financial services companies 2 4 4 2 4 3 4 2 3 5 2 5
I canrsquot afford to take financial advice 3 3 6 8 2 4 3 5 3 2 3 2
I donrsquot trust the financial services industry 12 11 8 6 5 10 6 2 2 3 5 4
I donrsquot see the need to save for the long-term 6 1 2 2 3 3 3 1 2 1 4 3
Concerns about unstable currencies currency fluctuations 2 5 1 3 3 3 4 3 4 5 15 2
Other (PLEASE STATE) 3 3 1 1 3 2 4 6 2 2 1
Donrsquot know 17 12 11 7 8 6 3 6 8 6 3 17
The Young Pragmatic and Penniless Generation | 40
Chart 10 More money would incentivize young employees to save for retirement Q Which if any of the following would encourage you to save for retirement
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsMore generous tax breaks on long-term savings and pensions 20 44 30 32 27 23 42 42 33 43 40 32 products
Ger
man
yG
erm
any
Access to financial education so that I am more aware of what 24 6 14 21 16 22 21 12 23 24 43 25 I need to do for myself
Swed
enSw
eden
Access to professional financial advice so that I have personalized
Uni
ted
20 24 23 23 15 21 25 9 22 23 44 13 U
nite
drecommendations on what steps
Kin
gdom
Kin
gdom
I need to take
Simpler investment products that 12 33 19 28 20 Fr
ance
18 27 16 32 28 36 10 Fr
ance
I can understand with less jargon
Better and more frequent information about my retirement 16 28 20 27 27 23
Spai
n20 18 25 31 45 22
Spai
nsavings
Better legal protection in case I am 12 18 13 18 10 24 18 13 13 19 21 6 P
olan
dP
olan
dsold the wrong product
A pay rise 46 54 44 64 55 50 70 72 67 64 53 37
A better retirement plan pension H
unga
ryH
unga
ry27 32 25 33 29 26 42 35 39 44 33 32 match from my employer
Other 4 2 1 1 2 2 3 3 2 U
nite
d3 0
Uni
ted
Stat
esSt
ates
Donrsquot know 17 9 16 10 10 12 3 8 8 5 3 17
Not applicable - I already have 3 3 4 2 2 1 1 1 2 2 3 sufficient savings Ca
nada
Cana
da
Chin
aCh
ina
Chart 11 A majority of younger employees do not have a written plan for retirement Q Which of the following best describes your retirement planning strategy
Japa
n Ja
pan
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
I have a written plan 7 18 10 9 6 8 6 5 13 10 8 4
I have a plan but it is not written 24 47 37 25 23 31 29 31 37 44 55 24
down
I do not have a plan 61 32 51 61 62 55 62 58 45 42 34 61
Donrsquot know 7 3 3 5 8 6 3 6 4 4 3 12
41 | The Young Pragmatic and Penniless Generation
Chart 12 For young employees friends and family are the leading source of retirement savings information Q And which of these sources (of information) is most important to you
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
Bank adviser 6 11 19 5 25 5 7 4 3 17 10 2 N
ethe
rlan
dsN
ethe
rlan
dsProfessional financial adviser 12 22 10 12 10 19 19 22 21 25 19 10
Insurance agent spokesperson 3 10 2 3 1 3 6 2 3 0 3 2 G
erm
any
Ger
man
yInsurance company website 3 1 3 2 4 4 2 2 1 3 1
Personal finance websites online 8 5 7 8 5 4 10 8 12 6 10 8 retirement planning tools Sw
eden
Swed
enPersonal finance media 2 2 2 2 2 6 3 1 2 1 6 2
Government website 7 1 3 6 U
nite
d5 2 3 3 2 3 7 1
Uni
ted
Kin
gdom
Kin
gdom
Bank website 2 3 3 2 1 0 3 2 1 6 3 3
My employer 12 8 4 9 4 7 5 12 8 5 4 1 Fr
ance
Fran
ceAccountant 2 6 4 4 1 3 1 3 5 5 1 3
Lawyer 2 3 1 2 2 8 4 2 1 2 2 0 Sp
ain
Spai
nFriends and family 21 22 30 28 24 26 18 24 26 20 25 24
None of these P
olan
dP
olan
dNot applicable 21 7 16 18 19 13 17 15 14 9 5 41
Hun
gary
Hun
gary
Chart 13 Most young workers feel their employer should provide some kind of pension Q In the future what if anything should employers do to help people plan for retirement
Uni
ted
Uni
ted
Stat
esSt
ates
Cana
daCa
nada
Chin
aCh
ina
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 Ja
pan
Japa
n Employers should be required to 24 43 20 40 21 26 20 28 37 34 20 30 contribute to workersrsquo pensions
Employers should be required to make a pension available but not to 12 13 7 17 20 15 15 4 11 14 22 5 contribute into it
Employers should not be required to provide pensions but should 15 9 12 8 9 8 11 6 11 9 9 11 provide information on how to plan for retirement
Employers should provide a range of flexible benefits and 13 18 18 16 15 27 25 28 21 22 45 12 allow individuals to choose which benefits they actually want
Nothing ndash it should be left to individual employees to take care 2 2 5 1 4 3 3 5 6 5 1 9 of themselves
Nothing ndash it should be left to the government to take care of its 2 5 5 2 5 8 15 14 1 4 0 4 citizens
Donrsquot know 30 10 32 17 27 12 12 15 13 13 3 29
The Young Pragmatic and Penniless Generation | 42
Chart 14 Workplace pensions are relatively low down in young workersrsquo priorities when choosing a job Q How important to you would the following workplace benefits be if you were choosing your next job
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsBasic salary 86 93 88 91 88 92 90 94 90 93 96 94
Holiday entitlement 87 94 89 91 92 94 91 94 93 94 96 91 G
erm
any
Ger
man
yOvertime and bonus pay 86 93 87 88 89 90 89 94 90 91 97 90
Location of workplace 88 91 86 92 89 90 89 92 93 93 92 86 Sw
eden
Swed
enMedical health insurance 73 92 84 65 86 87 88 87 93 94 98 83
Opportunities for career progression 86 91 81 90 90 94 91 94 92 91 96 81 U
nite
dU
nite
dAccess to a workplace retirement 85 85 81 82
Kin
gdom
78 84 80 78 84 86 93 74 K
ingd
omplan with employer contributions
Access to good training provision 85 87 85 88 86 91 85 93 86 90 95 74 Fr
ance
Fran
ceFlexible working hours 79 87 58 86 81 89 81 87 91 91 92 57
Life insurance 72 75 79 69 80 82 Sp
ain
84 80 81 88 93 74 Sp
ain
(death in service benefits)
Phased retirement or other employer programs providing for 74 54 75 71 72 81 76 74 76 81 91 65
Pol
and
Pol
and
a transition into retirement
Ability to work past the normal 68 57 64 65 64 74 72 65 74 76 80 70 retirement age H
unga
ryH
unga
ry
Access to a workplace retirement 62 74 61 68 59 77 61 47 68 74 89 65 plan without employer contributions U
nite
dU
nite
dSt
ates
Stat
esEmployee share plans 50 72 54 65 59 73 61 51 64 73 91 55
Access to creche help with the 67 75 64 56 69 79 75 83 58 69 89 68 cost of childcare Ca
nada
Cana
da
Opportunities for foreign travel 53 54 60 55 50 71 58 66 57 61 79 37
Company car 51 46 45 47 49 63 51 49 36 49 69 Ch
ina
39 Ch
ina
Japa
n Ja
pan
Chart 15 Young workers think the state pension will need to be reformed Q With the cost of government pensions becoming a greater concern as people live longer which if any of the following do you think
the government should undertake
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
The government should reduce the overall cost of state pension 15 33 16 15 16 20 28 22 21 26 30 16 provision by reducing the value of individual pension plans
The government should increase overall funding available for the 12 21 30 22 14 34 19 26 21 18 29 10 state pension through raising taxes
43 | The Young Pragmatic and Penniless Generation
he government should take a alanced approach with some 27 26 12 30 28 23 24 16 34 31 38 41 eductions in individual payments nd some increases in tax
he government should not do nything State pension provision 7 2 12 5 3 4 3 3 5 4 0 5 ill remain perfectly affordable in he future
onrsquot know 38 19 29 29 39 20 26 34 19 21 4 28
Net
herl
ands
art 16 Products which protect against investment risk are the most important to young workers ( interested) Thinking about the types of financial products you could purchase to help provide you with security in retirement on a scale of 1 to 5
how interested are you in the following options G
erm
any
Swed
en
Uni
ted
Kin
gdom
ase 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 Fr
ance
100 100 100 100 100 100 100 100 100 100 100 100
product providing a guaranteed etirement income stream or 75 81 73 76 74 83 78 76 87 85 94 69
Spai
nifetime income in retirement
product which protects my 74 79 73 76 72 82 77 74 84 86 94 65 etirement income against inflation P
olan
d
product which guarantees that I 72 82 73 78 75 81 76 73 86 86 90 67 onrsquot lose my initial investment H
unga
ry product which helps meet the ost of long-term care if I become 74 79 74 77 70 79 76 71 86 85 84 66
Uni
ted
nable to look after myself St
ates
product which protects my capital 71 81 71 76 68 76 77 73 84 83 93 65 rom poor investment returns Ca
nada
product which generates a etirement income and allows 69 78 71 75 68 81 77 72 84 86 94 70 e to take a lump sum from the
Chin
anvestment should I need to
product where the annual 66 78 68 75 72 79 77 70 85 86 87 64 anagement charges are kept low Ja
pan
product which enables me to eep some control over how my 71 73 70 75 72 80 75 69 88 85 91 63 avings are invested during my etirement
product which manages the sset allocation so that I am never 68 70 67 73 66 76 71 67 80 83 95 60 xposed to a level of risk Irsquom not omfortable with
product which continues to rovide a retirement income to my 74 78 71 75 73 81 79 73 86 82 94 60 pouse in the event that I die first
product which protects my family gainst having to pay estate taxes 73 76 71 74 75 81 75 69 82 82 89 56 hen I die
product which locks in investment 72 71 63 73 64 71 59 56 81 84 89 61 eturns during the good years
Tbra
Tawt
D
ChQ
B
Arl
Ar
Ad
Acu
Af
Armi
Am
Aksr
Aaec
Aps
Aaw
Ar
The Young Pragmatic and Penniless Generation | 44
About Aegon Transamerica Center for Retirement Studiesreg and Cicero Consulting
Aegon Transamerica Center Aegon is an international life insurance pensions and asset reg management company with businesses in over 20 markets for Retirement Studies in the Americas Europe and Asia Aegon companies employ The Transamerica Center for Retirement Studiesreg (TCRS) is
around 24000 people and serve millions of customers a division of the Transamerica Institute a nonprofit private
worldwide foundation TCRS is dedicated to educating the public on
wwwaegoncom emerging trends surrounding retirement security in the
United States TCRSrsquo research emphasizes employer-sponsored
In 2010 Aegon became a founding member of the Global retirement plans issues faced by small to mid-sized companies
Coalition on Aging which seeks to raise awareness of aging and their employees and the implications of legislative and
issues among policymakers and the general public A major aim regulatory changes Transamerica Institute is funded by
of the coalition is to transform the way we think and speak contributions from Transamerica Life Insurance Company and
about aging replacing the familiar rhetoric of lsquoproblemsrsquo with its affiliates and may receive funds from unaffiliated third-
a more positive discussion of lsquopossibilitiesrsquo and lsquoopportunitiesrsquo parties For more information about TCRS please refer to
wwwglobalcoalitiononagingcom wwwtransamericacenterorg
Cicero Consulting A leading consultancy firm serving the banking insurance and
asset management sector Cicero specializes in public policy
and communications consulting as well as global thought
leadership and independent market research Cicero was
established in 2001 and now operates from offices in London
Brussels Washington and Singapore As a market leader in
pensions and retirement research Cicero designed
and analyzed the research and contributed to the report
wwwcicero-groupcom
The Young Pragmatic and Penniless Generation | 32
Marta acebo Mark Green Patricia Plas
Paula alvarez douGlas henck scott roane
Frits bart wendel hoFMan thurstan robinson
Grace basile
lynette belFry
andrew berwick
Frans van der horst
tatsuo kai
herMan kaPPelle
Patti rowey
sarah russell
Joost van schaGen
robin boon Gaacutebor kePecs dick schiethart
bert-JaaP brons Marco keiM erik schouten
douG brooks
libby buet
kent callahan
JaiMe kirkPatrick
bas knol
roGer koch
anGela seyMour Jackson
kate sMith
renske stoker
Jeanne de cervens
dana chen
Peter kunkel
alexander kuiPers
eyleen sun
MartiJn tans
arkadiusz chMurzynski
heidi cho
brian lewis
Mike linder
GreG tucker
Mark twiGG
siMon clow siMon luke catherine wanG
robert colliGnon Jason Ma Marc van weede
catherine collinson GrzeGorz Mathea tiM willaert
wendy daniels
Michel denizot
edit drevenka
Paul Middleton
takaoh MiyaGawa
david Moulton
daniel wriGht
alex wynaendts
MacieJ zaPala
Jan driessen
kelly Fu
adrian Grace
Mark Mullin
Marcelle noltenius
stiG nybo
Peacuteter zatykoacute
vicky zeldin
Disclaimer This repor t contains general information only and does
not constitute a solicitation or offer No rights can be
derived from this repor t Aegon its par tners and any of
their affiliates or employees do not guarantee warrant
or represent the accuracy or completeness of the
information contained in the repor t
Acknowledgements
33 | The Young Pragmatic and Penniless Generation
References and notes i For a comparison of different retirement systems see lsquoPensions at a Glance 2011rsquo OECD 2011 ii As the survey was carried out online the survey results in China are based toward people living in urban areas iii ldquoPensions Marketsrdquo TheCityUK March 2013 p9 iv Global Employment Trends for Youth 2013 A generation at risk International Labour Organisation 2013 p2 v Eurostat July 2013 vi OECD Employment and Labour Markets Key Tables from OECD No 2 2012 vii The Federal Reserve Bank of New York 2012 Quarterly Report on Household Debt March 29 2013 viii World Bank ix lsquoWorld-class povertyrsquo The Economist February 27 2013
httpwwweconomistcomblogsanalects201302chinas-poor x lsquoThe Chinese slow down in char tsrsquo The Economist July 15 2013 xi lsquoChina rsquos welfare system difficult inflexible and blatantly unfairrsquo The Guardian April 23 2013
httpwwwtheguardiancomglobal-development2013apr23china-welfare-system-inflexible-unfair xii lsquo The Dutch experience with Defined Ambition pensions and the impact on companiesrsquo Aegon Global Pensions March 12 2013
httpwwwaegonglobalpensionscomenHomePublicationsNews-archiveNewsThe-Dutch-experience-with-Defined
Ambition-pensions-and-what-that-may-mean-for-companies-in-the-Netherlands-and-the-UK
shy
The Young Pragmatic and Penniless Generation | 34
Contact information HE ADQUARTER S
Aegon NV
PO Box 85
2501 CB The Hague
Telephone +31 70 344 32 10
w w waegoncom
MEDIA REL ATIONS
Telephone +31 70 344 89 56
Email gcc-iraegoncom
Countr y Index score
Germany 548
China 541
Canada 524
United States 519
The Netherlands 488
United Kingdom 486
Sweden 483
France 475
Hungar y 473
Poland 463
Spain 440
Japan 430
Total 489
Appendix 1 Aegon Retirement Readiness Index (ARRI) - technical note
Aegon Retirement Readiness Index (ARRI)-technical note 2013 Weightings (2012 in brackets) A sample of 12000 pre and post retirees was drawn from 1 Personal responsibilit y 20 (30)
twelve countries Of these 10800 (90) were pre-retirees 2 Level of awareness 30 (35)
and these were chosen for fur ther analysis of their plans 3 Financial capability Understanding 30 (25)
for retirement The Index that was developed forms an 4 Retirement planning 50 (50)
assessment of how well an individual perceives the adequacy 5 Financial preparedness 60 (60)
of his her own finances and financial awareness specifically 6 Income replacement 35 (35)
for addressing his retirement needs
Note that the weights devised to show the relative
The lsquotargetrsquo for the Index impor tance of each question in calculating the Index add to
The question on current savings activity was designated as the 225 These were then re-scaled so that a final scale of 1 to
target question (dependent variable) for predicting the level of 10 was calculated
preparedness for retirement Responses to this question were
then correlated with each of the six key questions (variables) Final scores by country below to understand which were driving the activity These weightings were multiplied by the actual scores for each
This was done because it was not felt to be correct to give respondent for each of the six Index questions and aggregated
each of the six variables described below an equal weight as to obtain a provisional score This was then adjusted to
they appeared to have quite different relationships to the give countr y scores out of 1 to 10 (A score of 1 to 10 had
target question sufficient differentiation to be used as the scale for analysis)
1 Personal responsibilit y for income in retirement
2 Level of awareness of need to plan for retirement
3 F inancial capability Understanding of financial matters
regarding plans for retirement
4 Retirement planning Level of development of plans
5 Financial preparedness for retirement
6 Income replacement Level of projected income replacement
The weighting To estimate the statistical significance of the decline in overall
scores in this yearrsquos Index is theoretically incalculable
Two things have changed from 2012 to 2013
1 C anada and China have joined the sample
2 The new countries have thus influenced the weights of
emphasis placed on the 6 variables used to calculate
the score hence the weights attached to the complex
calculation have changed
However it is noticeable that for countries which were sampled
in both time periods the mean scores for the six individual
variables have almost invariably declined and on average more
than half of them have shown a significant level of decline
In particular the question lsquoDo you think you will achieve this
incomersquo has for all countries shown a significant level of
decline We thus hypothesize that the comparative results
show a significant decline
The Young Pragmatic and Penniless Generation | 36
Net
herl
ands
Net
herl
ands
Net
herl
ands
Ger
man
yG
erm
any
Ger
man
yBase 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
Better off 7 4 23 Sw
eden
Swed
en11 5 7 8 3 11 14 50 5
Swed
en
About the same 19 18 27 23 8 19 18 13 29 29 24 21 U
ntie
dU
ntie
dU
nite
d Worse off 66 74 41 58 79 69 71 76 51 47 21 55
Kin
gdom
Kin
gdom
Kin
gdom
Donrsquot know 9 3 9 9 9 4 4 8 9 10 6 19
Fran
ceFr
ance
Fran
ce
Chart 2 Education of 20 ndash 29 year olds by country Q Please choose from the following list the highest level of educational or professional qualification you have
Spai
nSp
ain
Spa
in
Pol
and
Pol
and
Pol
and
Hun
gary
Hun
gary
Hun
gar y
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
dU
nite
d 100 100 100 100 100 100 100 100 100
Stat
es100 100 100
Stat
esSt
ates
Less than high school graduate 2 44 6 14 1 3 2 7 1 3 Ca
nada
Cana
daC
anad
aHigh school graduate 11 33 53 23 22 22 4 41 14 21 1 2
Some college or trade school 46 2 9 9 9 19 37 14 28 20 4 33 Ch
ina
Chin
aC
hina
College degree University degree 31 15 27 30 41 43 21 33 50 46 9 57
Postgraduate degree or 8 3 3 23 25 11 36 1 8 9 80 6 qualification Ja
pan
Japa
n Ja
pan
Other 2 4 1 1 1 2 0 5 0 6 2
None 0 1 1 0 1 0 0
NET Less than undergrad degree 61 82 70 47 34 46 43 66 42 45 11 37
NET Undergrad degree or higher 39 18 30 53 66 54 57 34 58 55 89 63
Chart 3 Aegon Retirement Readiness Index scores for young employees by country
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
NET Low Index (0-5) 80 64 79 81 85 78 81 73 65 61 61 87
NET Medium Index (6-7) 15 30 18 15 14 21 17 23 25 31 31 12
NET High Index (8-10) 4 6 3 3 1 2 2 4 10 8 7 1
Appendix 2 Country comparisons Chart 1 The majority of young employees believe that they will be worse off in retirement compared to their parents Q Do you think that future generations of retirees will be better off or worse off than those currently in retirement
37 | The Young Pragmatic and Penniless Generation
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsI always make sure that 27 34 27 26 17 14 19 22 35 33 32 20 I am saving for retirement
I only save for retirement G
erm
any
Ger
man
y21 27 20 13 17 21 16 6 17 24 20 24 occasionally from time to time
I am not saving for retirement now 6 11 8 11 5 15 9 4 10 8 9 5 although I have in the past Sw
eden
Swed
en
I am not saving for retirement 35 23 34 46 53 40 49 54 36 33 38 46 though I do intend to U
nite
dU
ntie
dK
ingd
omK
ingd
om I have never saved for retirement and 11 6 10 5 8 10 6 13 3 2 1 6 donrsquot intend to
Fran
ceFr
ance
Chart 5 Younger people are more likely not to be using any means of retirement savings Sp
ain
Spai
nQ Which financial means if any are you currently using to prepare for your retirement
Pol
and
Pol
and
only asked in Germany only asked in Spain
Hun
gary
Hun
gary
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
dSt
ates
Stat
es100 100 100 100 100 100 100 100 100 100 100 100
Defined benefit plan 16 10 25 29 15 3 76 11 20 13 5 Ca
nada
Cana
daDefined contribution plan 28 10 17 19 19 14 10 23 40 7 3
Private pension 8 18 14 10 5 9 4 13 12 40 66 4 Ch
ina
Chin
a Government pension social security 12 43 14 21 8 7 4 18 27 33 71 35
Stocks 5 12 14 7 4 17 7 2 13 10 23 9
Bonds 1 8 5 6 2 16 4 2 8 13 14 3 Ja
pan
Japa
n
Mutual funds 2 14 23 4 2 10 3 4 7 16 9 6
Investment insurances (annuities) 2 3 2 3 2 9 4 5 2 4 6 1
Savings accounts 23 37 38 25 23 6 29 15 36 37 65 36
Investment property 2 10 6 7 9 2 5 2 5 11 18 1
Employee stock purchase 1 1 1 4 1 29 0 4 1 7 1
My home 10 5 8 7 7 8 4 6 6 14 30 1
Reverse mortgage 1 4 2 4
My business 2 1 3 2 2 4 1 1 2 4 12 1
Inheritance 3 11 7 11 7 9 9 8 7 9 6 2
Annuities 1 15 2 2 1 4 3 2 1 2 8
Long-term care insurance 2 1 3 2 9 5 1 6 4 7 1
Life insurance 6 11 8 8 14 3 18 15 19 18 36 17
Unterstuumltzungskasse aus 2 Eigenmitteln finanziert
Unterstuumltzungskasse vom 2 Arbeitgeber finanziert
Chart 4 Younger employees are much more likely to aspire to save for retirement Which of the following best explains your approach to saving for retirement This can include money you contribute to any long-term
investment including pensions stocks and shares investment-linked insurances property etc
Q
The Young Pragmatic and Penniless Generation | 38
Plan de empleo mixto 2 (combinacioacuten de las dos anteriores)
Other 1 6 4 0 1 2 2 3 2 2 3 3
None nothing 8 14 12 23 25 31 6 27 21 17 3 24
Donrsquot know 29 6 17 13 19 8 4 9 7 7 0 9
hart 6 The younger generation has more negative associations of retirement Which if any of the following words do you most associate with retirement
Net
herl
ands
Net
herl
ands
Ger
man
yG
erm
any
Swed
enSw
eden
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
d100 100 100 100 100 100 100 100 100 100 100 100
Kin
gdom
Kin
gdom
Freedom 35 32 36 39 19 26 11 20 35 40 37 33
Opportunity 7 27 25 18 4 8 9 10 17 16 9 16 Fr
ance
Fran
ceLeisure 58 48 36 41 23 24 43 32 50 50 55 6
Excitement 2 5 3 8 2 6 1 2 17 17 4 3 Sp
ain
Spai
nPoverty 11 26 23 11 26 14 37 44 7 5 6 20
Insecurity 34 24 18 16 20 18 35 56 10 9 18 44 P
olan
dP
olan
dLoneliness 4 10 17 16 12 7 11 8 5 9 20 12
Ill health 2 19 7 14 15 9 49 23 6 6 29 11 H
unga
ryH
unga
ryDependent on others 11 11 5 18 14 8 18 19 14 6 11 4
Tired 3 4 8 10 14 10 17 6 7 7 13 19 U
nite
dU
nite
dFar away 38 19 25 21 61 32 2 13 33
Stat
es33 14 22
Stat
es
Boredom 14 16 6 12 16 12 15 8 12 12 16 17 Ca
nada
Cana
daEnjoyment 21 16 17 23 14 29 5 3 37 37 35 15
None of the above 0 1 1 2 0 2 1 1 2 2 1 2
Donrsquot know 2 2 3 3 2 2 1 2 0 Ch
ina
6 Ch
ina
hart 7 Many young employees think they are not on course to achieve target retirement income Ja
pan
Japa
n Do you think you will achieve this income [your estimated income needed in retirement]
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
I donrsquot know if I am on course to 56 37 57 59 50 39 49 48 48 41 22 68 achieve my retirement income
No I am on course to achieve around one-quarter (25) of my 10 14 9 13 15 14 14 13 10 10 10 7 retirement income
No I am on course to achieve around 12 20 14 11 19 19 18 15 12 11 23 12 half of my retirement income
No I am on course to achieve around three-quarters (75) of my 8 14 7 4 8 15 9 8 6 11 20 5 retirement income
Yes I am on course to achieve my 15 15 13 14 8 13 11 17 25 27 25 8 retirement income
CQ
CQ
39 | The Young Pragmatic and Penniless Generation
Chart 8 Young people in most countries expect to retire before 65 Q At what age do you expect to retire from all paid employment
Net
herl
ands
Ger
man
y
Swed
en
Uni
ted
Kin
gdom
Fran
ce
Spai
n
Pol
and
Hun
gary
Uni
ted
Stat
es
Cana
da
Chin
a
Japa
n
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
40 or under 0 1 1 0 0 1 3 1 5 12
41-50 1 2 3 5 2 2 6 3 9 4 37 9
51-59 4 4 4 6 2 4 11 5 7 10 30 1
60 5 11 8 12 10 13 19 12 12 16 21 27
61-64 2 11 10 2 20 7 4 13 5 3 1 2
65 17 22 44 31 34 32 16 26 26 32 3 25
66-69 42 32 15 9 12 29 20 13 9 9 0 1
70 19 11 10 18 10 5 10 9 13 12 0 6
71+ 5 5 5 9 4 5 5 3 7 5 1 4
Never 2 1 1 2 2 2 6 4 1 0 0
Donrsquot know 2 3 2 5 3 2 8 9 5 5 1 13
Mean 67 65 65 65 64 65 63 64 63 64 53 59
Median 67 65 65 65 65 65 65 65 65 65 55 60
Chart 9 Younger employees feel they donrsquot have money to invest for retirement Q What is the single biggest obstacle to you saving for retirement right now
Net
herl
ands
Ger
man
y
Swed
en
Uni
ted
Kin
gdom
Fran
ce
Spai
n
Pol
and
Hun
gary
Uni
ted
Stat
es
Cana
da
Chin
a
Japa
n
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
The uncertain economic environment 19 8 13 9 13 19 11 14 12 9 29 27
Lack of money to invest 28 41 33 43 47 34 48 55 47 50 6 19
Fear of poor investment returns over the coming years 2 5 10 7 5 6 8 2 6 8 14 6
Complexity of investment products 4 4 4 3 5 3 5 2 12 5
I donrsquot know how to go about investing for the long-term 2 3 10 8 5 5 3 3 6 8 7 9
The fees charged by financial services companies 2 4 4 2 4 3 4 2 3 5 2 5
I canrsquot afford to take financial advice 3 3 6 8 2 4 3 5 3 2 3 2
I donrsquot trust the financial services industry 12 11 8 6 5 10 6 2 2 3 5 4
I donrsquot see the need to save for the long-term 6 1 2 2 3 3 3 1 2 1 4 3
Concerns about unstable currencies currency fluctuations 2 5 1 3 3 3 4 3 4 5 15 2
Other (PLEASE STATE) 3 3 1 1 3 2 4 6 2 2 1
Donrsquot know 17 12 11 7 8 6 3 6 8 6 3 17
The Young Pragmatic and Penniless Generation | 40
Chart 10 More money would incentivize young employees to save for retirement Q Which if any of the following would encourage you to save for retirement
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsMore generous tax breaks on long-term savings and pensions 20 44 30 32 27 23 42 42 33 43 40 32 products
Ger
man
yG
erm
any
Access to financial education so that I am more aware of what 24 6 14 21 16 22 21 12 23 24 43 25 I need to do for myself
Swed
enSw
eden
Access to professional financial advice so that I have personalized
Uni
ted
20 24 23 23 15 21 25 9 22 23 44 13 U
nite
drecommendations on what steps
Kin
gdom
Kin
gdom
I need to take
Simpler investment products that 12 33 19 28 20 Fr
ance
18 27 16 32 28 36 10 Fr
ance
I can understand with less jargon
Better and more frequent information about my retirement 16 28 20 27 27 23
Spai
n20 18 25 31 45 22
Spai
nsavings
Better legal protection in case I am 12 18 13 18 10 24 18 13 13 19 21 6 P
olan
dP
olan
dsold the wrong product
A pay rise 46 54 44 64 55 50 70 72 67 64 53 37
A better retirement plan pension H
unga
ryH
unga
ry27 32 25 33 29 26 42 35 39 44 33 32 match from my employer
Other 4 2 1 1 2 2 3 3 2 U
nite
d3 0
Uni
ted
Stat
esSt
ates
Donrsquot know 17 9 16 10 10 12 3 8 8 5 3 17
Not applicable - I already have 3 3 4 2 2 1 1 1 2 2 3 sufficient savings Ca
nada
Cana
da
Chin
aCh
ina
Chart 11 A majority of younger employees do not have a written plan for retirement Q Which of the following best describes your retirement planning strategy
Japa
n Ja
pan
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
I have a written plan 7 18 10 9 6 8 6 5 13 10 8 4
I have a plan but it is not written 24 47 37 25 23 31 29 31 37 44 55 24
down
I do not have a plan 61 32 51 61 62 55 62 58 45 42 34 61
Donrsquot know 7 3 3 5 8 6 3 6 4 4 3 12
41 | The Young Pragmatic and Penniless Generation
Chart 12 For young employees friends and family are the leading source of retirement savings information Q And which of these sources (of information) is most important to you
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
Bank adviser 6 11 19 5 25 5 7 4 3 17 10 2 N
ethe
rlan
dsN
ethe
rlan
dsProfessional financial adviser 12 22 10 12 10 19 19 22 21 25 19 10
Insurance agent spokesperson 3 10 2 3 1 3 6 2 3 0 3 2 G
erm
any
Ger
man
yInsurance company website 3 1 3 2 4 4 2 2 1 3 1
Personal finance websites online 8 5 7 8 5 4 10 8 12 6 10 8 retirement planning tools Sw
eden
Swed
enPersonal finance media 2 2 2 2 2 6 3 1 2 1 6 2
Government website 7 1 3 6 U
nite
d5 2 3 3 2 3 7 1
Uni
ted
Kin
gdom
Kin
gdom
Bank website 2 3 3 2 1 0 3 2 1 6 3 3
My employer 12 8 4 9 4 7 5 12 8 5 4 1 Fr
ance
Fran
ceAccountant 2 6 4 4 1 3 1 3 5 5 1 3
Lawyer 2 3 1 2 2 8 4 2 1 2 2 0 Sp
ain
Spai
nFriends and family 21 22 30 28 24 26 18 24 26 20 25 24
None of these P
olan
dP
olan
dNot applicable 21 7 16 18 19 13 17 15 14 9 5 41
Hun
gary
Hun
gary
Chart 13 Most young workers feel their employer should provide some kind of pension Q In the future what if anything should employers do to help people plan for retirement
Uni
ted
Uni
ted
Stat
esSt
ates
Cana
daCa
nada
Chin
aCh
ina
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 Ja
pan
Japa
n Employers should be required to 24 43 20 40 21 26 20 28 37 34 20 30 contribute to workersrsquo pensions
Employers should be required to make a pension available but not to 12 13 7 17 20 15 15 4 11 14 22 5 contribute into it
Employers should not be required to provide pensions but should 15 9 12 8 9 8 11 6 11 9 9 11 provide information on how to plan for retirement
Employers should provide a range of flexible benefits and 13 18 18 16 15 27 25 28 21 22 45 12 allow individuals to choose which benefits they actually want
Nothing ndash it should be left to individual employees to take care 2 2 5 1 4 3 3 5 6 5 1 9 of themselves
Nothing ndash it should be left to the government to take care of its 2 5 5 2 5 8 15 14 1 4 0 4 citizens
Donrsquot know 30 10 32 17 27 12 12 15 13 13 3 29
The Young Pragmatic and Penniless Generation | 42
Chart 14 Workplace pensions are relatively low down in young workersrsquo priorities when choosing a job Q How important to you would the following workplace benefits be if you were choosing your next job
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsBasic salary 86 93 88 91 88 92 90 94 90 93 96 94
Holiday entitlement 87 94 89 91 92 94 91 94 93 94 96 91 G
erm
any
Ger
man
yOvertime and bonus pay 86 93 87 88 89 90 89 94 90 91 97 90
Location of workplace 88 91 86 92 89 90 89 92 93 93 92 86 Sw
eden
Swed
enMedical health insurance 73 92 84 65 86 87 88 87 93 94 98 83
Opportunities for career progression 86 91 81 90 90 94 91 94 92 91 96 81 U
nite
dU
nite
dAccess to a workplace retirement 85 85 81 82
Kin
gdom
78 84 80 78 84 86 93 74 K
ingd
omplan with employer contributions
Access to good training provision 85 87 85 88 86 91 85 93 86 90 95 74 Fr
ance
Fran
ceFlexible working hours 79 87 58 86 81 89 81 87 91 91 92 57
Life insurance 72 75 79 69 80 82 Sp
ain
84 80 81 88 93 74 Sp
ain
(death in service benefits)
Phased retirement or other employer programs providing for 74 54 75 71 72 81 76 74 76 81 91 65
Pol
and
Pol
and
a transition into retirement
Ability to work past the normal 68 57 64 65 64 74 72 65 74 76 80 70 retirement age H
unga
ryH
unga
ry
Access to a workplace retirement 62 74 61 68 59 77 61 47 68 74 89 65 plan without employer contributions U
nite
dU
nite
dSt
ates
Stat
esEmployee share plans 50 72 54 65 59 73 61 51 64 73 91 55
Access to creche help with the 67 75 64 56 69 79 75 83 58 69 89 68 cost of childcare Ca
nada
Cana
da
Opportunities for foreign travel 53 54 60 55 50 71 58 66 57 61 79 37
Company car 51 46 45 47 49 63 51 49 36 49 69 Ch
ina
39 Ch
ina
Japa
n Ja
pan
Chart 15 Young workers think the state pension will need to be reformed Q With the cost of government pensions becoming a greater concern as people live longer which if any of the following do you think
the government should undertake
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
The government should reduce the overall cost of state pension 15 33 16 15 16 20 28 22 21 26 30 16 provision by reducing the value of individual pension plans
The government should increase overall funding available for the 12 21 30 22 14 34 19 26 21 18 29 10 state pension through raising taxes
43 | The Young Pragmatic and Penniless Generation
he government should take a alanced approach with some 27 26 12 30 28 23 24 16 34 31 38 41 eductions in individual payments nd some increases in tax
he government should not do nything State pension provision 7 2 12 5 3 4 3 3 5 4 0 5 ill remain perfectly affordable in he future
onrsquot know 38 19 29 29 39 20 26 34 19 21 4 28
Net
herl
ands
art 16 Products which protect against investment risk are the most important to young workers ( interested) Thinking about the types of financial products you could purchase to help provide you with security in retirement on a scale of 1 to 5
how interested are you in the following options G
erm
any
Swed
en
Uni
ted
Kin
gdom
ase 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 Fr
ance
100 100 100 100 100 100 100 100 100 100 100 100
product providing a guaranteed etirement income stream or 75 81 73 76 74 83 78 76 87 85 94 69
Spai
nifetime income in retirement
product which protects my 74 79 73 76 72 82 77 74 84 86 94 65 etirement income against inflation P
olan
d
product which guarantees that I 72 82 73 78 75 81 76 73 86 86 90 67 onrsquot lose my initial investment H
unga
ry product which helps meet the ost of long-term care if I become 74 79 74 77 70 79 76 71 86 85 84 66
Uni
ted
nable to look after myself St
ates
product which protects my capital 71 81 71 76 68 76 77 73 84 83 93 65 rom poor investment returns Ca
nada
product which generates a etirement income and allows 69 78 71 75 68 81 77 72 84 86 94 70 e to take a lump sum from the
Chin
anvestment should I need to
product where the annual 66 78 68 75 72 79 77 70 85 86 87 64 anagement charges are kept low Ja
pan
product which enables me to eep some control over how my 71 73 70 75 72 80 75 69 88 85 91 63 avings are invested during my etirement
product which manages the sset allocation so that I am never 68 70 67 73 66 76 71 67 80 83 95 60 xposed to a level of risk Irsquom not omfortable with
product which continues to rovide a retirement income to my 74 78 71 75 73 81 79 73 86 82 94 60 pouse in the event that I die first
product which protects my family gainst having to pay estate taxes 73 76 71 74 75 81 75 69 82 82 89 56 hen I die
product which locks in investment 72 71 63 73 64 71 59 56 81 84 89 61 eturns during the good years
Tbra
Tawt
D
ChQ
B
Arl
Ar
Ad
Acu
Af
Armi
Am
Aksr
Aaec
Aps
Aaw
Ar
The Young Pragmatic and Penniless Generation | 44
Marta acebo Mark Green Patricia Plas
Paula alvarez douGlas henck scott roane
Frits bart wendel hoFMan thurstan robinson
Grace basile
lynette belFry
andrew berwick
Frans van der horst
tatsuo kai
herMan kaPPelle
Patti rowey
sarah russell
Joost van schaGen
robin boon Gaacutebor kePecs dick schiethart
bert-JaaP brons Marco keiM erik schouten
douG brooks
libby buet
kent callahan
JaiMe kirkPatrick
bas knol
roGer koch
anGela seyMour Jackson
kate sMith
renske stoker
Jeanne de cervens
dana chen
Peter kunkel
alexander kuiPers
eyleen sun
MartiJn tans
arkadiusz chMurzynski
heidi cho
brian lewis
Mike linder
GreG tucker
Mark twiGG
siMon clow siMon luke catherine wanG
robert colliGnon Jason Ma Marc van weede
catherine collinson GrzeGorz Mathea tiM willaert
wendy daniels
Michel denizot
edit drevenka
Paul Middleton
takaoh MiyaGawa
david Moulton
daniel wriGht
alex wynaendts
MacieJ zaPala
Jan driessen
kelly Fu
adrian Grace
Mark Mullin
Marcelle noltenius
stiG nybo
Peacuteter zatykoacute
vicky zeldin
Disclaimer This repor t contains general information only and does
not constitute a solicitation or offer No rights can be
derived from this repor t Aegon its par tners and any of
their affiliates or employees do not guarantee warrant
or represent the accuracy or completeness of the
information contained in the repor t
Acknowledgements
33 | The Young Pragmatic and Penniless Generation
References and notes i For a comparison of different retirement systems see lsquoPensions at a Glance 2011rsquo OECD 2011 ii As the survey was carried out online the survey results in China are based toward people living in urban areas iii ldquoPensions Marketsrdquo TheCityUK March 2013 p9 iv Global Employment Trends for Youth 2013 A generation at risk International Labour Organisation 2013 p2 v Eurostat July 2013 vi OECD Employment and Labour Markets Key Tables from OECD No 2 2012 vii The Federal Reserve Bank of New York 2012 Quarterly Report on Household Debt March 29 2013 viii World Bank ix lsquoWorld-class povertyrsquo The Economist February 27 2013
httpwwweconomistcomblogsanalects201302chinas-poor x lsquoThe Chinese slow down in char tsrsquo The Economist July 15 2013 xi lsquoChina rsquos welfare system difficult inflexible and blatantly unfairrsquo The Guardian April 23 2013
httpwwwtheguardiancomglobal-development2013apr23china-welfare-system-inflexible-unfair xii lsquo The Dutch experience with Defined Ambition pensions and the impact on companiesrsquo Aegon Global Pensions March 12 2013
httpwwwaegonglobalpensionscomenHomePublicationsNews-archiveNewsThe-Dutch-experience-with-Defined
Ambition-pensions-and-what-that-may-mean-for-companies-in-the-Netherlands-and-the-UK
shy
The Young Pragmatic and Penniless Generation | 34
Contact information HE ADQUARTER S
Aegon NV
PO Box 85
2501 CB The Hague
Telephone +31 70 344 32 10
w w waegoncom
MEDIA REL ATIONS
Telephone +31 70 344 89 56
Email gcc-iraegoncom
Countr y Index score
Germany 548
China 541
Canada 524
United States 519
The Netherlands 488
United Kingdom 486
Sweden 483
France 475
Hungar y 473
Poland 463
Spain 440
Japan 430
Total 489
Appendix 1 Aegon Retirement Readiness Index (ARRI) - technical note
Aegon Retirement Readiness Index (ARRI)-technical note 2013 Weightings (2012 in brackets) A sample of 12000 pre and post retirees was drawn from 1 Personal responsibilit y 20 (30)
twelve countries Of these 10800 (90) were pre-retirees 2 Level of awareness 30 (35)
and these were chosen for fur ther analysis of their plans 3 Financial capability Understanding 30 (25)
for retirement The Index that was developed forms an 4 Retirement planning 50 (50)
assessment of how well an individual perceives the adequacy 5 Financial preparedness 60 (60)
of his her own finances and financial awareness specifically 6 Income replacement 35 (35)
for addressing his retirement needs
Note that the weights devised to show the relative
The lsquotargetrsquo for the Index impor tance of each question in calculating the Index add to
The question on current savings activity was designated as the 225 These were then re-scaled so that a final scale of 1 to
target question (dependent variable) for predicting the level of 10 was calculated
preparedness for retirement Responses to this question were
then correlated with each of the six key questions (variables) Final scores by country below to understand which were driving the activity These weightings were multiplied by the actual scores for each
This was done because it was not felt to be correct to give respondent for each of the six Index questions and aggregated
each of the six variables described below an equal weight as to obtain a provisional score This was then adjusted to
they appeared to have quite different relationships to the give countr y scores out of 1 to 10 (A score of 1 to 10 had
target question sufficient differentiation to be used as the scale for analysis)
1 Personal responsibilit y for income in retirement
2 Level of awareness of need to plan for retirement
3 F inancial capability Understanding of financial matters
regarding plans for retirement
4 Retirement planning Level of development of plans
5 Financial preparedness for retirement
6 Income replacement Level of projected income replacement
The weighting To estimate the statistical significance of the decline in overall
scores in this yearrsquos Index is theoretically incalculable
Two things have changed from 2012 to 2013
1 C anada and China have joined the sample
2 The new countries have thus influenced the weights of
emphasis placed on the 6 variables used to calculate
the score hence the weights attached to the complex
calculation have changed
However it is noticeable that for countries which were sampled
in both time periods the mean scores for the six individual
variables have almost invariably declined and on average more
than half of them have shown a significant level of decline
In particular the question lsquoDo you think you will achieve this
incomersquo has for all countries shown a significant level of
decline We thus hypothesize that the comparative results
show a significant decline
The Young Pragmatic and Penniless Generation | 36
Net
herl
ands
Net
herl
ands
Net
herl
ands
Ger
man
yG
erm
any
Ger
man
yBase 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
Better off 7 4 23 Sw
eden
Swed
en11 5 7 8 3 11 14 50 5
Swed
en
About the same 19 18 27 23 8 19 18 13 29 29 24 21 U
ntie
dU
ntie
dU
nite
d Worse off 66 74 41 58 79 69 71 76 51 47 21 55
Kin
gdom
Kin
gdom
Kin
gdom
Donrsquot know 9 3 9 9 9 4 4 8 9 10 6 19
Fran
ceFr
ance
Fran
ce
Chart 2 Education of 20 ndash 29 year olds by country Q Please choose from the following list the highest level of educational or professional qualification you have
Spai
nSp
ain
Spa
in
Pol
and
Pol
and
Pol
and
Hun
gary
Hun
gary
Hun
gar y
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
dU
nite
d 100 100 100 100 100 100 100 100 100
Stat
es100 100 100
Stat
esSt
ates
Less than high school graduate 2 44 6 14 1 3 2 7 1 3 Ca
nada
Cana
daC
anad
aHigh school graduate 11 33 53 23 22 22 4 41 14 21 1 2
Some college or trade school 46 2 9 9 9 19 37 14 28 20 4 33 Ch
ina
Chin
aC
hina
College degree University degree 31 15 27 30 41 43 21 33 50 46 9 57
Postgraduate degree or 8 3 3 23 25 11 36 1 8 9 80 6 qualification Ja
pan
Japa
n Ja
pan
Other 2 4 1 1 1 2 0 5 0 6 2
None 0 1 1 0 1 0 0
NET Less than undergrad degree 61 82 70 47 34 46 43 66 42 45 11 37
NET Undergrad degree or higher 39 18 30 53 66 54 57 34 58 55 89 63
Chart 3 Aegon Retirement Readiness Index scores for young employees by country
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
NET Low Index (0-5) 80 64 79 81 85 78 81 73 65 61 61 87
NET Medium Index (6-7) 15 30 18 15 14 21 17 23 25 31 31 12
NET High Index (8-10) 4 6 3 3 1 2 2 4 10 8 7 1
Appendix 2 Country comparisons Chart 1 The majority of young employees believe that they will be worse off in retirement compared to their parents Q Do you think that future generations of retirees will be better off or worse off than those currently in retirement
37 | The Young Pragmatic and Penniless Generation
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsI always make sure that 27 34 27 26 17 14 19 22 35 33 32 20 I am saving for retirement
I only save for retirement G
erm
any
Ger
man
y21 27 20 13 17 21 16 6 17 24 20 24 occasionally from time to time
I am not saving for retirement now 6 11 8 11 5 15 9 4 10 8 9 5 although I have in the past Sw
eden
Swed
en
I am not saving for retirement 35 23 34 46 53 40 49 54 36 33 38 46 though I do intend to U
nite
dU
ntie
dK
ingd
omK
ingd
om I have never saved for retirement and 11 6 10 5 8 10 6 13 3 2 1 6 donrsquot intend to
Fran
ceFr
ance
Chart 5 Younger people are more likely not to be using any means of retirement savings Sp
ain
Spai
nQ Which financial means if any are you currently using to prepare for your retirement
Pol
and
Pol
and
only asked in Germany only asked in Spain
Hun
gary
Hun
gary
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
dSt
ates
Stat
es100 100 100 100 100 100 100 100 100 100 100 100
Defined benefit plan 16 10 25 29 15 3 76 11 20 13 5 Ca
nada
Cana
daDefined contribution plan 28 10 17 19 19 14 10 23 40 7 3
Private pension 8 18 14 10 5 9 4 13 12 40 66 4 Ch
ina
Chin
a Government pension social security 12 43 14 21 8 7 4 18 27 33 71 35
Stocks 5 12 14 7 4 17 7 2 13 10 23 9
Bonds 1 8 5 6 2 16 4 2 8 13 14 3 Ja
pan
Japa
n
Mutual funds 2 14 23 4 2 10 3 4 7 16 9 6
Investment insurances (annuities) 2 3 2 3 2 9 4 5 2 4 6 1
Savings accounts 23 37 38 25 23 6 29 15 36 37 65 36
Investment property 2 10 6 7 9 2 5 2 5 11 18 1
Employee stock purchase 1 1 1 4 1 29 0 4 1 7 1
My home 10 5 8 7 7 8 4 6 6 14 30 1
Reverse mortgage 1 4 2 4
My business 2 1 3 2 2 4 1 1 2 4 12 1
Inheritance 3 11 7 11 7 9 9 8 7 9 6 2
Annuities 1 15 2 2 1 4 3 2 1 2 8
Long-term care insurance 2 1 3 2 9 5 1 6 4 7 1
Life insurance 6 11 8 8 14 3 18 15 19 18 36 17
Unterstuumltzungskasse aus 2 Eigenmitteln finanziert
Unterstuumltzungskasse vom 2 Arbeitgeber finanziert
Chart 4 Younger employees are much more likely to aspire to save for retirement Which of the following best explains your approach to saving for retirement This can include money you contribute to any long-term
investment including pensions stocks and shares investment-linked insurances property etc
Q
The Young Pragmatic and Penniless Generation | 38
Plan de empleo mixto 2 (combinacioacuten de las dos anteriores)
Other 1 6 4 0 1 2 2 3 2 2 3 3
None nothing 8 14 12 23 25 31 6 27 21 17 3 24
Donrsquot know 29 6 17 13 19 8 4 9 7 7 0 9
hart 6 The younger generation has more negative associations of retirement Which if any of the following words do you most associate with retirement
Net
herl
ands
Net
herl
ands
Ger
man
yG
erm
any
Swed
enSw
eden
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
d100 100 100 100 100 100 100 100 100 100 100 100
Kin
gdom
Kin
gdom
Freedom 35 32 36 39 19 26 11 20 35 40 37 33
Opportunity 7 27 25 18 4 8 9 10 17 16 9 16 Fr
ance
Fran
ceLeisure 58 48 36 41 23 24 43 32 50 50 55 6
Excitement 2 5 3 8 2 6 1 2 17 17 4 3 Sp
ain
Spai
nPoverty 11 26 23 11 26 14 37 44 7 5 6 20
Insecurity 34 24 18 16 20 18 35 56 10 9 18 44 P
olan
dP
olan
dLoneliness 4 10 17 16 12 7 11 8 5 9 20 12
Ill health 2 19 7 14 15 9 49 23 6 6 29 11 H
unga
ryH
unga
ryDependent on others 11 11 5 18 14 8 18 19 14 6 11 4
Tired 3 4 8 10 14 10 17 6 7 7 13 19 U
nite
dU
nite
dFar away 38 19 25 21 61 32 2 13 33
Stat
es33 14 22
Stat
es
Boredom 14 16 6 12 16 12 15 8 12 12 16 17 Ca
nada
Cana
daEnjoyment 21 16 17 23 14 29 5 3 37 37 35 15
None of the above 0 1 1 2 0 2 1 1 2 2 1 2
Donrsquot know 2 2 3 3 2 2 1 2 0 Ch
ina
6 Ch
ina
hart 7 Many young employees think they are not on course to achieve target retirement income Ja
pan
Japa
n Do you think you will achieve this income [your estimated income needed in retirement]
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
I donrsquot know if I am on course to 56 37 57 59 50 39 49 48 48 41 22 68 achieve my retirement income
No I am on course to achieve around one-quarter (25) of my 10 14 9 13 15 14 14 13 10 10 10 7 retirement income
No I am on course to achieve around 12 20 14 11 19 19 18 15 12 11 23 12 half of my retirement income
No I am on course to achieve around three-quarters (75) of my 8 14 7 4 8 15 9 8 6 11 20 5 retirement income
Yes I am on course to achieve my 15 15 13 14 8 13 11 17 25 27 25 8 retirement income
CQ
CQ
39 | The Young Pragmatic and Penniless Generation
Chart 8 Young people in most countries expect to retire before 65 Q At what age do you expect to retire from all paid employment
Net
herl
ands
Ger
man
y
Swed
en
Uni
ted
Kin
gdom
Fran
ce
Spai
n
Pol
and
Hun
gary
Uni
ted
Stat
es
Cana
da
Chin
a
Japa
n
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
40 or under 0 1 1 0 0 1 3 1 5 12
41-50 1 2 3 5 2 2 6 3 9 4 37 9
51-59 4 4 4 6 2 4 11 5 7 10 30 1
60 5 11 8 12 10 13 19 12 12 16 21 27
61-64 2 11 10 2 20 7 4 13 5 3 1 2
65 17 22 44 31 34 32 16 26 26 32 3 25
66-69 42 32 15 9 12 29 20 13 9 9 0 1
70 19 11 10 18 10 5 10 9 13 12 0 6
71+ 5 5 5 9 4 5 5 3 7 5 1 4
Never 2 1 1 2 2 2 6 4 1 0 0
Donrsquot know 2 3 2 5 3 2 8 9 5 5 1 13
Mean 67 65 65 65 64 65 63 64 63 64 53 59
Median 67 65 65 65 65 65 65 65 65 65 55 60
Chart 9 Younger employees feel they donrsquot have money to invest for retirement Q What is the single biggest obstacle to you saving for retirement right now
Net
herl
ands
Ger
man
y
Swed
en
Uni
ted
Kin
gdom
Fran
ce
Spai
n
Pol
and
Hun
gary
Uni
ted
Stat
es
Cana
da
Chin
a
Japa
n
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
The uncertain economic environment 19 8 13 9 13 19 11 14 12 9 29 27
Lack of money to invest 28 41 33 43 47 34 48 55 47 50 6 19
Fear of poor investment returns over the coming years 2 5 10 7 5 6 8 2 6 8 14 6
Complexity of investment products 4 4 4 3 5 3 5 2 12 5
I donrsquot know how to go about investing for the long-term 2 3 10 8 5 5 3 3 6 8 7 9
The fees charged by financial services companies 2 4 4 2 4 3 4 2 3 5 2 5
I canrsquot afford to take financial advice 3 3 6 8 2 4 3 5 3 2 3 2
I donrsquot trust the financial services industry 12 11 8 6 5 10 6 2 2 3 5 4
I donrsquot see the need to save for the long-term 6 1 2 2 3 3 3 1 2 1 4 3
Concerns about unstable currencies currency fluctuations 2 5 1 3 3 3 4 3 4 5 15 2
Other (PLEASE STATE) 3 3 1 1 3 2 4 6 2 2 1
Donrsquot know 17 12 11 7 8 6 3 6 8 6 3 17
The Young Pragmatic and Penniless Generation | 40
Chart 10 More money would incentivize young employees to save for retirement Q Which if any of the following would encourage you to save for retirement
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsMore generous tax breaks on long-term savings and pensions 20 44 30 32 27 23 42 42 33 43 40 32 products
Ger
man
yG
erm
any
Access to financial education so that I am more aware of what 24 6 14 21 16 22 21 12 23 24 43 25 I need to do for myself
Swed
enSw
eden
Access to professional financial advice so that I have personalized
Uni
ted
20 24 23 23 15 21 25 9 22 23 44 13 U
nite
drecommendations on what steps
Kin
gdom
Kin
gdom
I need to take
Simpler investment products that 12 33 19 28 20 Fr
ance
18 27 16 32 28 36 10 Fr
ance
I can understand with less jargon
Better and more frequent information about my retirement 16 28 20 27 27 23
Spai
n20 18 25 31 45 22
Spai
nsavings
Better legal protection in case I am 12 18 13 18 10 24 18 13 13 19 21 6 P
olan
dP
olan
dsold the wrong product
A pay rise 46 54 44 64 55 50 70 72 67 64 53 37
A better retirement plan pension H
unga
ryH
unga
ry27 32 25 33 29 26 42 35 39 44 33 32 match from my employer
Other 4 2 1 1 2 2 3 3 2 U
nite
d3 0
Uni
ted
Stat
esSt
ates
Donrsquot know 17 9 16 10 10 12 3 8 8 5 3 17
Not applicable - I already have 3 3 4 2 2 1 1 1 2 2 3 sufficient savings Ca
nada
Cana
da
Chin
aCh
ina
Chart 11 A majority of younger employees do not have a written plan for retirement Q Which of the following best describes your retirement planning strategy
Japa
n Ja
pan
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
I have a written plan 7 18 10 9 6 8 6 5 13 10 8 4
I have a plan but it is not written 24 47 37 25 23 31 29 31 37 44 55 24
down
I do not have a plan 61 32 51 61 62 55 62 58 45 42 34 61
Donrsquot know 7 3 3 5 8 6 3 6 4 4 3 12
41 | The Young Pragmatic and Penniless Generation
Chart 12 For young employees friends and family are the leading source of retirement savings information Q And which of these sources (of information) is most important to you
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
Bank adviser 6 11 19 5 25 5 7 4 3 17 10 2 N
ethe
rlan
dsN
ethe
rlan
dsProfessional financial adviser 12 22 10 12 10 19 19 22 21 25 19 10
Insurance agent spokesperson 3 10 2 3 1 3 6 2 3 0 3 2 G
erm
any
Ger
man
yInsurance company website 3 1 3 2 4 4 2 2 1 3 1
Personal finance websites online 8 5 7 8 5 4 10 8 12 6 10 8 retirement planning tools Sw
eden
Swed
enPersonal finance media 2 2 2 2 2 6 3 1 2 1 6 2
Government website 7 1 3 6 U
nite
d5 2 3 3 2 3 7 1
Uni
ted
Kin
gdom
Kin
gdom
Bank website 2 3 3 2 1 0 3 2 1 6 3 3
My employer 12 8 4 9 4 7 5 12 8 5 4 1 Fr
ance
Fran
ceAccountant 2 6 4 4 1 3 1 3 5 5 1 3
Lawyer 2 3 1 2 2 8 4 2 1 2 2 0 Sp
ain
Spai
nFriends and family 21 22 30 28 24 26 18 24 26 20 25 24
None of these P
olan
dP
olan
dNot applicable 21 7 16 18 19 13 17 15 14 9 5 41
Hun
gary
Hun
gary
Chart 13 Most young workers feel their employer should provide some kind of pension Q In the future what if anything should employers do to help people plan for retirement
Uni
ted
Uni
ted
Stat
esSt
ates
Cana
daCa
nada
Chin
aCh
ina
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 Ja
pan
Japa
n Employers should be required to 24 43 20 40 21 26 20 28 37 34 20 30 contribute to workersrsquo pensions
Employers should be required to make a pension available but not to 12 13 7 17 20 15 15 4 11 14 22 5 contribute into it
Employers should not be required to provide pensions but should 15 9 12 8 9 8 11 6 11 9 9 11 provide information on how to plan for retirement
Employers should provide a range of flexible benefits and 13 18 18 16 15 27 25 28 21 22 45 12 allow individuals to choose which benefits they actually want
Nothing ndash it should be left to individual employees to take care 2 2 5 1 4 3 3 5 6 5 1 9 of themselves
Nothing ndash it should be left to the government to take care of its 2 5 5 2 5 8 15 14 1 4 0 4 citizens
Donrsquot know 30 10 32 17 27 12 12 15 13 13 3 29
The Young Pragmatic and Penniless Generation | 42
Chart 14 Workplace pensions are relatively low down in young workersrsquo priorities when choosing a job Q How important to you would the following workplace benefits be if you were choosing your next job
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsBasic salary 86 93 88 91 88 92 90 94 90 93 96 94
Holiday entitlement 87 94 89 91 92 94 91 94 93 94 96 91 G
erm
any
Ger
man
yOvertime and bonus pay 86 93 87 88 89 90 89 94 90 91 97 90
Location of workplace 88 91 86 92 89 90 89 92 93 93 92 86 Sw
eden
Swed
enMedical health insurance 73 92 84 65 86 87 88 87 93 94 98 83
Opportunities for career progression 86 91 81 90 90 94 91 94 92 91 96 81 U
nite
dU
nite
dAccess to a workplace retirement 85 85 81 82
Kin
gdom
78 84 80 78 84 86 93 74 K
ingd
omplan with employer contributions
Access to good training provision 85 87 85 88 86 91 85 93 86 90 95 74 Fr
ance
Fran
ceFlexible working hours 79 87 58 86 81 89 81 87 91 91 92 57
Life insurance 72 75 79 69 80 82 Sp
ain
84 80 81 88 93 74 Sp
ain
(death in service benefits)
Phased retirement or other employer programs providing for 74 54 75 71 72 81 76 74 76 81 91 65
Pol
and
Pol
and
a transition into retirement
Ability to work past the normal 68 57 64 65 64 74 72 65 74 76 80 70 retirement age H
unga
ryH
unga
ry
Access to a workplace retirement 62 74 61 68 59 77 61 47 68 74 89 65 plan without employer contributions U
nite
dU
nite
dSt
ates
Stat
esEmployee share plans 50 72 54 65 59 73 61 51 64 73 91 55
Access to creche help with the 67 75 64 56 69 79 75 83 58 69 89 68 cost of childcare Ca
nada
Cana
da
Opportunities for foreign travel 53 54 60 55 50 71 58 66 57 61 79 37
Company car 51 46 45 47 49 63 51 49 36 49 69 Ch
ina
39 Ch
ina
Japa
n Ja
pan
Chart 15 Young workers think the state pension will need to be reformed Q With the cost of government pensions becoming a greater concern as people live longer which if any of the following do you think
the government should undertake
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
The government should reduce the overall cost of state pension 15 33 16 15 16 20 28 22 21 26 30 16 provision by reducing the value of individual pension plans
The government should increase overall funding available for the 12 21 30 22 14 34 19 26 21 18 29 10 state pension through raising taxes
43 | The Young Pragmatic and Penniless Generation
he government should take a alanced approach with some 27 26 12 30 28 23 24 16 34 31 38 41 eductions in individual payments nd some increases in tax
he government should not do nything State pension provision 7 2 12 5 3 4 3 3 5 4 0 5 ill remain perfectly affordable in he future
onrsquot know 38 19 29 29 39 20 26 34 19 21 4 28
Net
herl
ands
art 16 Products which protect against investment risk are the most important to young workers ( interested) Thinking about the types of financial products you could purchase to help provide you with security in retirement on a scale of 1 to 5
how interested are you in the following options G
erm
any
Swed
en
Uni
ted
Kin
gdom
ase 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 Fr
ance
100 100 100 100 100 100 100 100 100 100 100 100
product providing a guaranteed etirement income stream or 75 81 73 76 74 83 78 76 87 85 94 69
Spai
nifetime income in retirement
product which protects my 74 79 73 76 72 82 77 74 84 86 94 65 etirement income against inflation P
olan
d
product which guarantees that I 72 82 73 78 75 81 76 73 86 86 90 67 onrsquot lose my initial investment H
unga
ry product which helps meet the ost of long-term care if I become 74 79 74 77 70 79 76 71 86 85 84 66
Uni
ted
nable to look after myself St
ates
product which protects my capital 71 81 71 76 68 76 77 73 84 83 93 65 rom poor investment returns Ca
nada
product which generates a etirement income and allows 69 78 71 75 68 81 77 72 84 86 94 70 e to take a lump sum from the
Chin
anvestment should I need to
product where the annual 66 78 68 75 72 79 77 70 85 86 87 64 anagement charges are kept low Ja
pan
product which enables me to eep some control over how my 71 73 70 75 72 80 75 69 88 85 91 63 avings are invested during my etirement
product which manages the sset allocation so that I am never 68 70 67 73 66 76 71 67 80 83 95 60 xposed to a level of risk Irsquom not omfortable with
product which continues to rovide a retirement income to my 74 78 71 75 73 81 79 73 86 82 94 60 pouse in the event that I die first
product which protects my family gainst having to pay estate taxes 73 76 71 74 75 81 75 69 82 82 89 56 hen I die
product which locks in investment 72 71 63 73 64 71 59 56 81 84 89 61 eturns during the good years
Tbra
Tawt
D
ChQ
B
Arl
Ar
Ad
Acu
Af
Armi
Am
Aksr
Aaec
Aps
Aaw
Ar
The Young Pragmatic and Penniless Generation | 44
References and notes i For a comparison of different retirement systems see lsquoPensions at a Glance 2011rsquo OECD 2011 ii As the survey was carried out online the survey results in China are based toward people living in urban areas iii ldquoPensions Marketsrdquo TheCityUK March 2013 p9 iv Global Employment Trends for Youth 2013 A generation at risk International Labour Organisation 2013 p2 v Eurostat July 2013 vi OECD Employment and Labour Markets Key Tables from OECD No 2 2012 vii The Federal Reserve Bank of New York 2012 Quarterly Report on Household Debt March 29 2013 viii World Bank ix lsquoWorld-class povertyrsquo The Economist February 27 2013
httpwwweconomistcomblogsanalects201302chinas-poor x lsquoThe Chinese slow down in char tsrsquo The Economist July 15 2013 xi lsquoChina rsquos welfare system difficult inflexible and blatantly unfairrsquo The Guardian April 23 2013
httpwwwtheguardiancomglobal-development2013apr23china-welfare-system-inflexible-unfair xii lsquo The Dutch experience with Defined Ambition pensions and the impact on companiesrsquo Aegon Global Pensions March 12 2013
httpwwwaegonglobalpensionscomenHomePublicationsNews-archiveNewsThe-Dutch-experience-with-Defined
Ambition-pensions-and-what-that-may-mean-for-companies-in-the-Netherlands-and-the-UK
shy
The Young Pragmatic and Penniless Generation | 34
Contact information HE ADQUARTER S
Aegon NV
PO Box 85
2501 CB The Hague
Telephone +31 70 344 32 10
w w waegoncom
MEDIA REL ATIONS
Telephone +31 70 344 89 56
Email gcc-iraegoncom
Countr y Index score
Germany 548
China 541
Canada 524
United States 519
The Netherlands 488
United Kingdom 486
Sweden 483
France 475
Hungar y 473
Poland 463
Spain 440
Japan 430
Total 489
Appendix 1 Aegon Retirement Readiness Index (ARRI) - technical note
Aegon Retirement Readiness Index (ARRI)-technical note 2013 Weightings (2012 in brackets) A sample of 12000 pre and post retirees was drawn from 1 Personal responsibilit y 20 (30)
twelve countries Of these 10800 (90) were pre-retirees 2 Level of awareness 30 (35)
and these were chosen for fur ther analysis of their plans 3 Financial capability Understanding 30 (25)
for retirement The Index that was developed forms an 4 Retirement planning 50 (50)
assessment of how well an individual perceives the adequacy 5 Financial preparedness 60 (60)
of his her own finances and financial awareness specifically 6 Income replacement 35 (35)
for addressing his retirement needs
Note that the weights devised to show the relative
The lsquotargetrsquo for the Index impor tance of each question in calculating the Index add to
The question on current savings activity was designated as the 225 These were then re-scaled so that a final scale of 1 to
target question (dependent variable) for predicting the level of 10 was calculated
preparedness for retirement Responses to this question were
then correlated with each of the six key questions (variables) Final scores by country below to understand which were driving the activity These weightings were multiplied by the actual scores for each
This was done because it was not felt to be correct to give respondent for each of the six Index questions and aggregated
each of the six variables described below an equal weight as to obtain a provisional score This was then adjusted to
they appeared to have quite different relationships to the give countr y scores out of 1 to 10 (A score of 1 to 10 had
target question sufficient differentiation to be used as the scale for analysis)
1 Personal responsibilit y for income in retirement
2 Level of awareness of need to plan for retirement
3 F inancial capability Understanding of financial matters
regarding plans for retirement
4 Retirement planning Level of development of plans
5 Financial preparedness for retirement
6 Income replacement Level of projected income replacement
The weighting To estimate the statistical significance of the decline in overall
scores in this yearrsquos Index is theoretically incalculable
Two things have changed from 2012 to 2013
1 C anada and China have joined the sample
2 The new countries have thus influenced the weights of
emphasis placed on the 6 variables used to calculate
the score hence the weights attached to the complex
calculation have changed
However it is noticeable that for countries which were sampled
in both time periods the mean scores for the six individual
variables have almost invariably declined and on average more
than half of them have shown a significant level of decline
In particular the question lsquoDo you think you will achieve this
incomersquo has for all countries shown a significant level of
decline We thus hypothesize that the comparative results
show a significant decline
The Young Pragmatic and Penniless Generation | 36
Net
herl
ands
Net
herl
ands
Net
herl
ands
Ger
man
yG
erm
any
Ger
man
yBase 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
Better off 7 4 23 Sw
eden
Swed
en11 5 7 8 3 11 14 50 5
Swed
en
About the same 19 18 27 23 8 19 18 13 29 29 24 21 U
ntie
dU
ntie
dU
nite
d Worse off 66 74 41 58 79 69 71 76 51 47 21 55
Kin
gdom
Kin
gdom
Kin
gdom
Donrsquot know 9 3 9 9 9 4 4 8 9 10 6 19
Fran
ceFr
ance
Fran
ce
Chart 2 Education of 20 ndash 29 year olds by country Q Please choose from the following list the highest level of educational or professional qualification you have
Spai
nSp
ain
Spa
in
Pol
and
Pol
and
Pol
and
Hun
gary
Hun
gary
Hun
gar y
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
dU
nite
d 100 100 100 100 100 100 100 100 100
Stat
es100 100 100
Stat
esSt
ates
Less than high school graduate 2 44 6 14 1 3 2 7 1 3 Ca
nada
Cana
daC
anad
aHigh school graduate 11 33 53 23 22 22 4 41 14 21 1 2
Some college or trade school 46 2 9 9 9 19 37 14 28 20 4 33 Ch
ina
Chin
aC
hina
College degree University degree 31 15 27 30 41 43 21 33 50 46 9 57
Postgraduate degree or 8 3 3 23 25 11 36 1 8 9 80 6 qualification Ja
pan
Japa
n Ja
pan
Other 2 4 1 1 1 2 0 5 0 6 2
None 0 1 1 0 1 0 0
NET Less than undergrad degree 61 82 70 47 34 46 43 66 42 45 11 37
NET Undergrad degree or higher 39 18 30 53 66 54 57 34 58 55 89 63
Chart 3 Aegon Retirement Readiness Index scores for young employees by country
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
NET Low Index (0-5) 80 64 79 81 85 78 81 73 65 61 61 87
NET Medium Index (6-7) 15 30 18 15 14 21 17 23 25 31 31 12
NET High Index (8-10) 4 6 3 3 1 2 2 4 10 8 7 1
Appendix 2 Country comparisons Chart 1 The majority of young employees believe that they will be worse off in retirement compared to their parents Q Do you think that future generations of retirees will be better off or worse off than those currently in retirement
37 | The Young Pragmatic and Penniless Generation
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsI always make sure that 27 34 27 26 17 14 19 22 35 33 32 20 I am saving for retirement
I only save for retirement G
erm
any
Ger
man
y21 27 20 13 17 21 16 6 17 24 20 24 occasionally from time to time
I am not saving for retirement now 6 11 8 11 5 15 9 4 10 8 9 5 although I have in the past Sw
eden
Swed
en
I am not saving for retirement 35 23 34 46 53 40 49 54 36 33 38 46 though I do intend to U
nite
dU
ntie
dK
ingd
omK
ingd
om I have never saved for retirement and 11 6 10 5 8 10 6 13 3 2 1 6 donrsquot intend to
Fran
ceFr
ance
Chart 5 Younger people are more likely not to be using any means of retirement savings Sp
ain
Spai
nQ Which financial means if any are you currently using to prepare for your retirement
Pol
and
Pol
and
only asked in Germany only asked in Spain
Hun
gary
Hun
gary
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
dSt
ates
Stat
es100 100 100 100 100 100 100 100 100 100 100 100
Defined benefit plan 16 10 25 29 15 3 76 11 20 13 5 Ca
nada
Cana
daDefined contribution plan 28 10 17 19 19 14 10 23 40 7 3
Private pension 8 18 14 10 5 9 4 13 12 40 66 4 Ch
ina
Chin
a Government pension social security 12 43 14 21 8 7 4 18 27 33 71 35
Stocks 5 12 14 7 4 17 7 2 13 10 23 9
Bonds 1 8 5 6 2 16 4 2 8 13 14 3 Ja
pan
Japa
n
Mutual funds 2 14 23 4 2 10 3 4 7 16 9 6
Investment insurances (annuities) 2 3 2 3 2 9 4 5 2 4 6 1
Savings accounts 23 37 38 25 23 6 29 15 36 37 65 36
Investment property 2 10 6 7 9 2 5 2 5 11 18 1
Employee stock purchase 1 1 1 4 1 29 0 4 1 7 1
My home 10 5 8 7 7 8 4 6 6 14 30 1
Reverse mortgage 1 4 2 4
My business 2 1 3 2 2 4 1 1 2 4 12 1
Inheritance 3 11 7 11 7 9 9 8 7 9 6 2
Annuities 1 15 2 2 1 4 3 2 1 2 8
Long-term care insurance 2 1 3 2 9 5 1 6 4 7 1
Life insurance 6 11 8 8 14 3 18 15 19 18 36 17
Unterstuumltzungskasse aus 2 Eigenmitteln finanziert
Unterstuumltzungskasse vom 2 Arbeitgeber finanziert
Chart 4 Younger employees are much more likely to aspire to save for retirement Which of the following best explains your approach to saving for retirement This can include money you contribute to any long-term
investment including pensions stocks and shares investment-linked insurances property etc
Q
The Young Pragmatic and Penniless Generation | 38
Plan de empleo mixto 2 (combinacioacuten de las dos anteriores)
Other 1 6 4 0 1 2 2 3 2 2 3 3
None nothing 8 14 12 23 25 31 6 27 21 17 3 24
Donrsquot know 29 6 17 13 19 8 4 9 7 7 0 9
hart 6 The younger generation has more negative associations of retirement Which if any of the following words do you most associate with retirement
Net
herl
ands
Net
herl
ands
Ger
man
yG
erm
any
Swed
enSw
eden
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
d100 100 100 100 100 100 100 100 100 100 100 100
Kin
gdom
Kin
gdom
Freedom 35 32 36 39 19 26 11 20 35 40 37 33
Opportunity 7 27 25 18 4 8 9 10 17 16 9 16 Fr
ance
Fran
ceLeisure 58 48 36 41 23 24 43 32 50 50 55 6
Excitement 2 5 3 8 2 6 1 2 17 17 4 3 Sp
ain
Spai
nPoverty 11 26 23 11 26 14 37 44 7 5 6 20
Insecurity 34 24 18 16 20 18 35 56 10 9 18 44 P
olan
dP
olan
dLoneliness 4 10 17 16 12 7 11 8 5 9 20 12
Ill health 2 19 7 14 15 9 49 23 6 6 29 11 H
unga
ryH
unga
ryDependent on others 11 11 5 18 14 8 18 19 14 6 11 4
Tired 3 4 8 10 14 10 17 6 7 7 13 19 U
nite
dU
nite
dFar away 38 19 25 21 61 32 2 13 33
Stat
es33 14 22
Stat
es
Boredom 14 16 6 12 16 12 15 8 12 12 16 17 Ca
nada
Cana
daEnjoyment 21 16 17 23 14 29 5 3 37 37 35 15
None of the above 0 1 1 2 0 2 1 1 2 2 1 2
Donrsquot know 2 2 3 3 2 2 1 2 0 Ch
ina
6 Ch
ina
hart 7 Many young employees think they are not on course to achieve target retirement income Ja
pan
Japa
n Do you think you will achieve this income [your estimated income needed in retirement]
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
I donrsquot know if I am on course to 56 37 57 59 50 39 49 48 48 41 22 68 achieve my retirement income
No I am on course to achieve around one-quarter (25) of my 10 14 9 13 15 14 14 13 10 10 10 7 retirement income
No I am on course to achieve around 12 20 14 11 19 19 18 15 12 11 23 12 half of my retirement income
No I am on course to achieve around three-quarters (75) of my 8 14 7 4 8 15 9 8 6 11 20 5 retirement income
Yes I am on course to achieve my 15 15 13 14 8 13 11 17 25 27 25 8 retirement income
CQ
CQ
39 | The Young Pragmatic and Penniless Generation
Chart 8 Young people in most countries expect to retire before 65 Q At what age do you expect to retire from all paid employment
Net
herl
ands
Ger
man
y
Swed
en
Uni
ted
Kin
gdom
Fran
ce
Spai
n
Pol
and
Hun
gary
Uni
ted
Stat
es
Cana
da
Chin
a
Japa
n
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
40 or under 0 1 1 0 0 1 3 1 5 12
41-50 1 2 3 5 2 2 6 3 9 4 37 9
51-59 4 4 4 6 2 4 11 5 7 10 30 1
60 5 11 8 12 10 13 19 12 12 16 21 27
61-64 2 11 10 2 20 7 4 13 5 3 1 2
65 17 22 44 31 34 32 16 26 26 32 3 25
66-69 42 32 15 9 12 29 20 13 9 9 0 1
70 19 11 10 18 10 5 10 9 13 12 0 6
71+ 5 5 5 9 4 5 5 3 7 5 1 4
Never 2 1 1 2 2 2 6 4 1 0 0
Donrsquot know 2 3 2 5 3 2 8 9 5 5 1 13
Mean 67 65 65 65 64 65 63 64 63 64 53 59
Median 67 65 65 65 65 65 65 65 65 65 55 60
Chart 9 Younger employees feel they donrsquot have money to invest for retirement Q What is the single biggest obstacle to you saving for retirement right now
Net
herl
ands
Ger
man
y
Swed
en
Uni
ted
Kin
gdom
Fran
ce
Spai
n
Pol
and
Hun
gary
Uni
ted
Stat
es
Cana
da
Chin
a
Japa
n
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
The uncertain economic environment 19 8 13 9 13 19 11 14 12 9 29 27
Lack of money to invest 28 41 33 43 47 34 48 55 47 50 6 19
Fear of poor investment returns over the coming years 2 5 10 7 5 6 8 2 6 8 14 6
Complexity of investment products 4 4 4 3 5 3 5 2 12 5
I donrsquot know how to go about investing for the long-term 2 3 10 8 5 5 3 3 6 8 7 9
The fees charged by financial services companies 2 4 4 2 4 3 4 2 3 5 2 5
I canrsquot afford to take financial advice 3 3 6 8 2 4 3 5 3 2 3 2
I donrsquot trust the financial services industry 12 11 8 6 5 10 6 2 2 3 5 4
I donrsquot see the need to save for the long-term 6 1 2 2 3 3 3 1 2 1 4 3
Concerns about unstable currencies currency fluctuations 2 5 1 3 3 3 4 3 4 5 15 2
Other (PLEASE STATE) 3 3 1 1 3 2 4 6 2 2 1
Donrsquot know 17 12 11 7 8 6 3 6 8 6 3 17
The Young Pragmatic and Penniless Generation | 40
Chart 10 More money would incentivize young employees to save for retirement Q Which if any of the following would encourage you to save for retirement
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsMore generous tax breaks on long-term savings and pensions 20 44 30 32 27 23 42 42 33 43 40 32 products
Ger
man
yG
erm
any
Access to financial education so that I am more aware of what 24 6 14 21 16 22 21 12 23 24 43 25 I need to do for myself
Swed
enSw
eden
Access to professional financial advice so that I have personalized
Uni
ted
20 24 23 23 15 21 25 9 22 23 44 13 U
nite
drecommendations on what steps
Kin
gdom
Kin
gdom
I need to take
Simpler investment products that 12 33 19 28 20 Fr
ance
18 27 16 32 28 36 10 Fr
ance
I can understand with less jargon
Better and more frequent information about my retirement 16 28 20 27 27 23
Spai
n20 18 25 31 45 22
Spai
nsavings
Better legal protection in case I am 12 18 13 18 10 24 18 13 13 19 21 6 P
olan
dP
olan
dsold the wrong product
A pay rise 46 54 44 64 55 50 70 72 67 64 53 37
A better retirement plan pension H
unga
ryH
unga
ry27 32 25 33 29 26 42 35 39 44 33 32 match from my employer
Other 4 2 1 1 2 2 3 3 2 U
nite
d3 0
Uni
ted
Stat
esSt
ates
Donrsquot know 17 9 16 10 10 12 3 8 8 5 3 17
Not applicable - I already have 3 3 4 2 2 1 1 1 2 2 3 sufficient savings Ca
nada
Cana
da
Chin
aCh
ina
Chart 11 A majority of younger employees do not have a written plan for retirement Q Which of the following best describes your retirement planning strategy
Japa
n Ja
pan
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
I have a written plan 7 18 10 9 6 8 6 5 13 10 8 4
I have a plan but it is not written 24 47 37 25 23 31 29 31 37 44 55 24
down
I do not have a plan 61 32 51 61 62 55 62 58 45 42 34 61
Donrsquot know 7 3 3 5 8 6 3 6 4 4 3 12
41 | The Young Pragmatic and Penniless Generation
Chart 12 For young employees friends and family are the leading source of retirement savings information Q And which of these sources (of information) is most important to you
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
Bank adviser 6 11 19 5 25 5 7 4 3 17 10 2 N
ethe
rlan
dsN
ethe
rlan
dsProfessional financial adviser 12 22 10 12 10 19 19 22 21 25 19 10
Insurance agent spokesperson 3 10 2 3 1 3 6 2 3 0 3 2 G
erm
any
Ger
man
yInsurance company website 3 1 3 2 4 4 2 2 1 3 1
Personal finance websites online 8 5 7 8 5 4 10 8 12 6 10 8 retirement planning tools Sw
eden
Swed
enPersonal finance media 2 2 2 2 2 6 3 1 2 1 6 2
Government website 7 1 3 6 U
nite
d5 2 3 3 2 3 7 1
Uni
ted
Kin
gdom
Kin
gdom
Bank website 2 3 3 2 1 0 3 2 1 6 3 3
My employer 12 8 4 9 4 7 5 12 8 5 4 1 Fr
ance
Fran
ceAccountant 2 6 4 4 1 3 1 3 5 5 1 3
Lawyer 2 3 1 2 2 8 4 2 1 2 2 0 Sp
ain
Spai
nFriends and family 21 22 30 28 24 26 18 24 26 20 25 24
None of these P
olan
dP
olan
dNot applicable 21 7 16 18 19 13 17 15 14 9 5 41
Hun
gary
Hun
gary
Chart 13 Most young workers feel their employer should provide some kind of pension Q In the future what if anything should employers do to help people plan for retirement
Uni
ted
Uni
ted
Stat
esSt
ates
Cana
daCa
nada
Chin
aCh
ina
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 Ja
pan
Japa
n Employers should be required to 24 43 20 40 21 26 20 28 37 34 20 30 contribute to workersrsquo pensions
Employers should be required to make a pension available but not to 12 13 7 17 20 15 15 4 11 14 22 5 contribute into it
Employers should not be required to provide pensions but should 15 9 12 8 9 8 11 6 11 9 9 11 provide information on how to plan for retirement
Employers should provide a range of flexible benefits and 13 18 18 16 15 27 25 28 21 22 45 12 allow individuals to choose which benefits they actually want
Nothing ndash it should be left to individual employees to take care 2 2 5 1 4 3 3 5 6 5 1 9 of themselves
Nothing ndash it should be left to the government to take care of its 2 5 5 2 5 8 15 14 1 4 0 4 citizens
Donrsquot know 30 10 32 17 27 12 12 15 13 13 3 29
The Young Pragmatic and Penniless Generation | 42
Chart 14 Workplace pensions are relatively low down in young workersrsquo priorities when choosing a job Q How important to you would the following workplace benefits be if you were choosing your next job
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsBasic salary 86 93 88 91 88 92 90 94 90 93 96 94
Holiday entitlement 87 94 89 91 92 94 91 94 93 94 96 91 G
erm
any
Ger
man
yOvertime and bonus pay 86 93 87 88 89 90 89 94 90 91 97 90
Location of workplace 88 91 86 92 89 90 89 92 93 93 92 86 Sw
eden
Swed
enMedical health insurance 73 92 84 65 86 87 88 87 93 94 98 83
Opportunities for career progression 86 91 81 90 90 94 91 94 92 91 96 81 U
nite
dU
nite
dAccess to a workplace retirement 85 85 81 82
Kin
gdom
78 84 80 78 84 86 93 74 K
ingd
omplan with employer contributions
Access to good training provision 85 87 85 88 86 91 85 93 86 90 95 74 Fr
ance
Fran
ceFlexible working hours 79 87 58 86 81 89 81 87 91 91 92 57
Life insurance 72 75 79 69 80 82 Sp
ain
84 80 81 88 93 74 Sp
ain
(death in service benefits)
Phased retirement or other employer programs providing for 74 54 75 71 72 81 76 74 76 81 91 65
Pol
and
Pol
and
a transition into retirement
Ability to work past the normal 68 57 64 65 64 74 72 65 74 76 80 70 retirement age H
unga
ryH
unga
ry
Access to a workplace retirement 62 74 61 68 59 77 61 47 68 74 89 65 plan without employer contributions U
nite
dU
nite
dSt
ates
Stat
esEmployee share plans 50 72 54 65 59 73 61 51 64 73 91 55
Access to creche help with the 67 75 64 56 69 79 75 83 58 69 89 68 cost of childcare Ca
nada
Cana
da
Opportunities for foreign travel 53 54 60 55 50 71 58 66 57 61 79 37
Company car 51 46 45 47 49 63 51 49 36 49 69 Ch
ina
39 Ch
ina
Japa
n Ja
pan
Chart 15 Young workers think the state pension will need to be reformed Q With the cost of government pensions becoming a greater concern as people live longer which if any of the following do you think
the government should undertake
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
The government should reduce the overall cost of state pension 15 33 16 15 16 20 28 22 21 26 30 16 provision by reducing the value of individual pension plans
The government should increase overall funding available for the 12 21 30 22 14 34 19 26 21 18 29 10 state pension through raising taxes
43 | The Young Pragmatic and Penniless Generation
he government should take a alanced approach with some 27 26 12 30 28 23 24 16 34 31 38 41 eductions in individual payments nd some increases in tax
he government should not do nything State pension provision 7 2 12 5 3 4 3 3 5 4 0 5 ill remain perfectly affordable in he future
onrsquot know 38 19 29 29 39 20 26 34 19 21 4 28
Net
herl
ands
art 16 Products which protect against investment risk are the most important to young workers ( interested) Thinking about the types of financial products you could purchase to help provide you with security in retirement on a scale of 1 to 5
how interested are you in the following options G
erm
any
Swed
en
Uni
ted
Kin
gdom
ase 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 Fr
ance
100 100 100 100 100 100 100 100 100 100 100 100
product providing a guaranteed etirement income stream or 75 81 73 76 74 83 78 76 87 85 94 69
Spai
nifetime income in retirement
product which protects my 74 79 73 76 72 82 77 74 84 86 94 65 etirement income against inflation P
olan
d
product which guarantees that I 72 82 73 78 75 81 76 73 86 86 90 67 onrsquot lose my initial investment H
unga
ry product which helps meet the ost of long-term care if I become 74 79 74 77 70 79 76 71 86 85 84 66
Uni
ted
nable to look after myself St
ates
product which protects my capital 71 81 71 76 68 76 77 73 84 83 93 65 rom poor investment returns Ca
nada
product which generates a etirement income and allows 69 78 71 75 68 81 77 72 84 86 94 70 e to take a lump sum from the
Chin
anvestment should I need to
product where the annual 66 78 68 75 72 79 77 70 85 86 87 64 anagement charges are kept low Ja
pan
product which enables me to eep some control over how my 71 73 70 75 72 80 75 69 88 85 91 63 avings are invested during my etirement
product which manages the sset allocation so that I am never 68 70 67 73 66 76 71 67 80 83 95 60 xposed to a level of risk Irsquom not omfortable with
product which continues to rovide a retirement income to my 74 78 71 75 73 81 79 73 86 82 94 60 pouse in the event that I die first
product which protects my family gainst having to pay estate taxes 73 76 71 74 75 81 75 69 82 82 89 56 hen I die
product which locks in investment 72 71 63 73 64 71 59 56 81 84 89 61 eturns during the good years
Tbra
Tawt
D
ChQ
B
Arl
Ar
Ad
Acu
Af
Armi
Am
Aksr
Aaec
Aps
Aaw
Ar
The Young Pragmatic and Penniless Generation | 44
Contact information HE ADQUARTER S
Aegon NV
PO Box 85
2501 CB The Hague
Telephone +31 70 344 32 10
w w waegoncom
MEDIA REL ATIONS
Telephone +31 70 344 89 56
Email gcc-iraegoncom
Countr y Index score
Germany 548
China 541
Canada 524
United States 519
The Netherlands 488
United Kingdom 486
Sweden 483
France 475
Hungar y 473
Poland 463
Spain 440
Japan 430
Total 489
Appendix 1 Aegon Retirement Readiness Index (ARRI) - technical note
Aegon Retirement Readiness Index (ARRI)-technical note 2013 Weightings (2012 in brackets) A sample of 12000 pre and post retirees was drawn from 1 Personal responsibilit y 20 (30)
twelve countries Of these 10800 (90) were pre-retirees 2 Level of awareness 30 (35)
and these were chosen for fur ther analysis of their plans 3 Financial capability Understanding 30 (25)
for retirement The Index that was developed forms an 4 Retirement planning 50 (50)
assessment of how well an individual perceives the adequacy 5 Financial preparedness 60 (60)
of his her own finances and financial awareness specifically 6 Income replacement 35 (35)
for addressing his retirement needs
Note that the weights devised to show the relative
The lsquotargetrsquo for the Index impor tance of each question in calculating the Index add to
The question on current savings activity was designated as the 225 These were then re-scaled so that a final scale of 1 to
target question (dependent variable) for predicting the level of 10 was calculated
preparedness for retirement Responses to this question were
then correlated with each of the six key questions (variables) Final scores by country below to understand which were driving the activity These weightings were multiplied by the actual scores for each
This was done because it was not felt to be correct to give respondent for each of the six Index questions and aggregated
each of the six variables described below an equal weight as to obtain a provisional score This was then adjusted to
they appeared to have quite different relationships to the give countr y scores out of 1 to 10 (A score of 1 to 10 had
target question sufficient differentiation to be used as the scale for analysis)
1 Personal responsibilit y for income in retirement
2 Level of awareness of need to plan for retirement
3 F inancial capability Understanding of financial matters
regarding plans for retirement
4 Retirement planning Level of development of plans
5 Financial preparedness for retirement
6 Income replacement Level of projected income replacement
The weighting To estimate the statistical significance of the decline in overall
scores in this yearrsquos Index is theoretically incalculable
Two things have changed from 2012 to 2013
1 C anada and China have joined the sample
2 The new countries have thus influenced the weights of
emphasis placed on the 6 variables used to calculate
the score hence the weights attached to the complex
calculation have changed
However it is noticeable that for countries which were sampled
in both time periods the mean scores for the six individual
variables have almost invariably declined and on average more
than half of them have shown a significant level of decline
In particular the question lsquoDo you think you will achieve this
incomersquo has for all countries shown a significant level of
decline We thus hypothesize that the comparative results
show a significant decline
The Young Pragmatic and Penniless Generation | 36
Net
herl
ands
Net
herl
ands
Net
herl
ands
Ger
man
yG
erm
any
Ger
man
yBase 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
Better off 7 4 23 Sw
eden
Swed
en11 5 7 8 3 11 14 50 5
Swed
en
About the same 19 18 27 23 8 19 18 13 29 29 24 21 U
ntie
dU
ntie
dU
nite
d Worse off 66 74 41 58 79 69 71 76 51 47 21 55
Kin
gdom
Kin
gdom
Kin
gdom
Donrsquot know 9 3 9 9 9 4 4 8 9 10 6 19
Fran
ceFr
ance
Fran
ce
Chart 2 Education of 20 ndash 29 year olds by country Q Please choose from the following list the highest level of educational or professional qualification you have
Spai
nSp
ain
Spa
in
Pol
and
Pol
and
Pol
and
Hun
gary
Hun
gary
Hun
gar y
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
dU
nite
d 100 100 100 100 100 100 100 100 100
Stat
es100 100 100
Stat
esSt
ates
Less than high school graduate 2 44 6 14 1 3 2 7 1 3 Ca
nada
Cana
daC
anad
aHigh school graduate 11 33 53 23 22 22 4 41 14 21 1 2
Some college or trade school 46 2 9 9 9 19 37 14 28 20 4 33 Ch
ina
Chin
aC
hina
College degree University degree 31 15 27 30 41 43 21 33 50 46 9 57
Postgraduate degree or 8 3 3 23 25 11 36 1 8 9 80 6 qualification Ja
pan
Japa
n Ja
pan
Other 2 4 1 1 1 2 0 5 0 6 2
None 0 1 1 0 1 0 0
NET Less than undergrad degree 61 82 70 47 34 46 43 66 42 45 11 37
NET Undergrad degree or higher 39 18 30 53 66 54 57 34 58 55 89 63
Chart 3 Aegon Retirement Readiness Index scores for young employees by country
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
NET Low Index (0-5) 80 64 79 81 85 78 81 73 65 61 61 87
NET Medium Index (6-7) 15 30 18 15 14 21 17 23 25 31 31 12
NET High Index (8-10) 4 6 3 3 1 2 2 4 10 8 7 1
Appendix 2 Country comparisons Chart 1 The majority of young employees believe that they will be worse off in retirement compared to their parents Q Do you think that future generations of retirees will be better off or worse off than those currently in retirement
37 | The Young Pragmatic and Penniless Generation
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsI always make sure that 27 34 27 26 17 14 19 22 35 33 32 20 I am saving for retirement
I only save for retirement G
erm
any
Ger
man
y21 27 20 13 17 21 16 6 17 24 20 24 occasionally from time to time
I am not saving for retirement now 6 11 8 11 5 15 9 4 10 8 9 5 although I have in the past Sw
eden
Swed
en
I am not saving for retirement 35 23 34 46 53 40 49 54 36 33 38 46 though I do intend to U
nite
dU
ntie
dK
ingd
omK
ingd
om I have never saved for retirement and 11 6 10 5 8 10 6 13 3 2 1 6 donrsquot intend to
Fran
ceFr
ance
Chart 5 Younger people are more likely not to be using any means of retirement savings Sp
ain
Spai
nQ Which financial means if any are you currently using to prepare for your retirement
Pol
and
Pol
and
only asked in Germany only asked in Spain
Hun
gary
Hun
gary
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
dSt
ates
Stat
es100 100 100 100 100 100 100 100 100 100 100 100
Defined benefit plan 16 10 25 29 15 3 76 11 20 13 5 Ca
nada
Cana
daDefined contribution plan 28 10 17 19 19 14 10 23 40 7 3
Private pension 8 18 14 10 5 9 4 13 12 40 66 4 Ch
ina
Chin
a Government pension social security 12 43 14 21 8 7 4 18 27 33 71 35
Stocks 5 12 14 7 4 17 7 2 13 10 23 9
Bonds 1 8 5 6 2 16 4 2 8 13 14 3 Ja
pan
Japa
n
Mutual funds 2 14 23 4 2 10 3 4 7 16 9 6
Investment insurances (annuities) 2 3 2 3 2 9 4 5 2 4 6 1
Savings accounts 23 37 38 25 23 6 29 15 36 37 65 36
Investment property 2 10 6 7 9 2 5 2 5 11 18 1
Employee stock purchase 1 1 1 4 1 29 0 4 1 7 1
My home 10 5 8 7 7 8 4 6 6 14 30 1
Reverse mortgage 1 4 2 4
My business 2 1 3 2 2 4 1 1 2 4 12 1
Inheritance 3 11 7 11 7 9 9 8 7 9 6 2
Annuities 1 15 2 2 1 4 3 2 1 2 8
Long-term care insurance 2 1 3 2 9 5 1 6 4 7 1
Life insurance 6 11 8 8 14 3 18 15 19 18 36 17
Unterstuumltzungskasse aus 2 Eigenmitteln finanziert
Unterstuumltzungskasse vom 2 Arbeitgeber finanziert
Chart 4 Younger employees are much more likely to aspire to save for retirement Which of the following best explains your approach to saving for retirement This can include money you contribute to any long-term
investment including pensions stocks and shares investment-linked insurances property etc
Q
The Young Pragmatic and Penniless Generation | 38
Plan de empleo mixto 2 (combinacioacuten de las dos anteriores)
Other 1 6 4 0 1 2 2 3 2 2 3 3
None nothing 8 14 12 23 25 31 6 27 21 17 3 24
Donrsquot know 29 6 17 13 19 8 4 9 7 7 0 9
hart 6 The younger generation has more negative associations of retirement Which if any of the following words do you most associate with retirement
Net
herl
ands
Net
herl
ands
Ger
man
yG
erm
any
Swed
enSw
eden
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
d100 100 100 100 100 100 100 100 100 100 100 100
Kin
gdom
Kin
gdom
Freedom 35 32 36 39 19 26 11 20 35 40 37 33
Opportunity 7 27 25 18 4 8 9 10 17 16 9 16 Fr
ance
Fran
ceLeisure 58 48 36 41 23 24 43 32 50 50 55 6
Excitement 2 5 3 8 2 6 1 2 17 17 4 3 Sp
ain
Spai
nPoverty 11 26 23 11 26 14 37 44 7 5 6 20
Insecurity 34 24 18 16 20 18 35 56 10 9 18 44 P
olan
dP
olan
dLoneliness 4 10 17 16 12 7 11 8 5 9 20 12
Ill health 2 19 7 14 15 9 49 23 6 6 29 11 H
unga
ryH
unga
ryDependent on others 11 11 5 18 14 8 18 19 14 6 11 4
Tired 3 4 8 10 14 10 17 6 7 7 13 19 U
nite
dU
nite
dFar away 38 19 25 21 61 32 2 13 33
Stat
es33 14 22
Stat
es
Boredom 14 16 6 12 16 12 15 8 12 12 16 17 Ca
nada
Cana
daEnjoyment 21 16 17 23 14 29 5 3 37 37 35 15
None of the above 0 1 1 2 0 2 1 1 2 2 1 2
Donrsquot know 2 2 3 3 2 2 1 2 0 Ch
ina
6 Ch
ina
hart 7 Many young employees think they are not on course to achieve target retirement income Ja
pan
Japa
n Do you think you will achieve this income [your estimated income needed in retirement]
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
I donrsquot know if I am on course to 56 37 57 59 50 39 49 48 48 41 22 68 achieve my retirement income
No I am on course to achieve around one-quarter (25) of my 10 14 9 13 15 14 14 13 10 10 10 7 retirement income
No I am on course to achieve around 12 20 14 11 19 19 18 15 12 11 23 12 half of my retirement income
No I am on course to achieve around three-quarters (75) of my 8 14 7 4 8 15 9 8 6 11 20 5 retirement income
Yes I am on course to achieve my 15 15 13 14 8 13 11 17 25 27 25 8 retirement income
CQ
CQ
39 | The Young Pragmatic and Penniless Generation
Chart 8 Young people in most countries expect to retire before 65 Q At what age do you expect to retire from all paid employment
Net
herl
ands
Ger
man
y
Swed
en
Uni
ted
Kin
gdom
Fran
ce
Spai
n
Pol
and
Hun
gary
Uni
ted
Stat
es
Cana
da
Chin
a
Japa
n
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
40 or under 0 1 1 0 0 1 3 1 5 12
41-50 1 2 3 5 2 2 6 3 9 4 37 9
51-59 4 4 4 6 2 4 11 5 7 10 30 1
60 5 11 8 12 10 13 19 12 12 16 21 27
61-64 2 11 10 2 20 7 4 13 5 3 1 2
65 17 22 44 31 34 32 16 26 26 32 3 25
66-69 42 32 15 9 12 29 20 13 9 9 0 1
70 19 11 10 18 10 5 10 9 13 12 0 6
71+ 5 5 5 9 4 5 5 3 7 5 1 4
Never 2 1 1 2 2 2 6 4 1 0 0
Donrsquot know 2 3 2 5 3 2 8 9 5 5 1 13
Mean 67 65 65 65 64 65 63 64 63 64 53 59
Median 67 65 65 65 65 65 65 65 65 65 55 60
Chart 9 Younger employees feel they donrsquot have money to invest for retirement Q What is the single biggest obstacle to you saving for retirement right now
Net
herl
ands
Ger
man
y
Swed
en
Uni
ted
Kin
gdom
Fran
ce
Spai
n
Pol
and
Hun
gary
Uni
ted
Stat
es
Cana
da
Chin
a
Japa
n
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
The uncertain economic environment 19 8 13 9 13 19 11 14 12 9 29 27
Lack of money to invest 28 41 33 43 47 34 48 55 47 50 6 19
Fear of poor investment returns over the coming years 2 5 10 7 5 6 8 2 6 8 14 6
Complexity of investment products 4 4 4 3 5 3 5 2 12 5
I donrsquot know how to go about investing for the long-term 2 3 10 8 5 5 3 3 6 8 7 9
The fees charged by financial services companies 2 4 4 2 4 3 4 2 3 5 2 5
I canrsquot afford to take financial advice 3 3 6 8 2 4 3 5 3 2 3 2
I donrsquot trust the financial services industry 12 11 8 6 5 10 6 2 2 3 5 4
I donrsquot see the need to save for the long-term 6 1 2 2 3 3 3 1 2 1 4 3
Concerns about unstable currencies currency fluctuations 2 5 1 3 3 3 4 3 4 5 15 2
Other (PLEASE STATE) 3 3 1 1 3 2 4 6 2 2 1
Donrsquot know 17 12 11 7 8 6 3 6 8 6 3 17
The Young Pragmatic and Penniless Generation | 40
Chart 10 More money would incentivize young employees to save for retirement Q Which if any of the following would encourage you to save for retirement
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsMore generous tax breaks on long-term savings and pensions 20 44 30 32 27 23 42 42 33 43 40 32 products
Ger
man
yG
erm
any
Access to financial education so that I am more aware of what 24 6 14 21 16 22 21 12 23 24 43 25 I need to do for myself
Swed
enSw
eden
Access to professional financial advice so that I have personalized
Uni
ted
20 24 23 23 15 21 25 9 22 23 44 13 U
nite
drecommendations on what steps
Kin
gdom
Kin
gdom
I need to take
Simpler investment products that 12 33 19 28 20 Fr
ance
18 27 16 32 28 36 10 Fr
ance
I can understand with less jargon
Better and more frequent information about my retirement 16 28 20 27 27 23
Spai
n20 18 25 31 45 22
Spai
nsavings
Better legal protection in case I am 12 18 13 18 10 24 18 13 13 19 21 6 P
olan
dP
olan
dsold the wrong product
A pay rise 46 54 44 64 55 50 70 72 67 64 53 37
A better retirement plan pension H
unga
ryH
unga
ry27 32 25 33 29 26 42 35 39 44 33 32 match from my employer
Other 4 2 1 1 2 2 3 3 2 U
nite
d3 0
Uni
ted
Stat
esSt
ates
Donrsquot know 17 9 16 10 10 12 3 8 8 5 3 17
Not applicable - I already have 3 3 4 2 2 1 1 1 2 2 3 sufficient savings Ca
nada
Cana
da
Chin
aCh
ina
Chart 11 A majority of younger employees do not have a written plan for retirement Q Which of the following best describes your retirement planning strategy
Japa
n Ja
pan
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
I have a written plan 7 18 10 9 6 8 6 5 13 10 8 4
I have a plan but it is not written 24 47 37 25 23 31 29 31 37 44 55 24
down
I do not have a plan 61 32 51 61 62 55 62 58 45 42 34 61
Donrsquot know 7 3 3 5 8 6 3 6 4 4 3 12
41 | The Young Pragmatic and Penniless Generation
Chart 12 For young employees friends and family are the leading source of retirement savings information Q And which of these sources (of information) is most important to you
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
Bank adviser 6 11 19 5 25 5 7 4 3 17 10 2 N
ethe
rlan
dsN
ethe
rlan
dsProfessional financial adviser 12 22 10 12 10 19 19 22 21 25 19 10
Insurance agent spokesperson 3 10 2 3 1 3 6 2 3 0 3 2 G
erm
any
Ger
man
yInsurance company website 3 1 3 2 4 4 2 2 1 3 1
Personal finance websites online 8 5 7 8 5 4 10 8 12 6 10 8 retirement planning tools Sw
eden
Swed
enPersonal finance media 2 2 2 2 2 6 3 1 2 1 6 2
Government website 7 1 3 6 U
nite
d5 2 3 3 2 3 7 1
Uni
ted
Kin
gdom
Kin
gdom
Bank website 2 3 3 2 1 0 3 2 1 6 3 3
My employer 12 8 4 9 4 7 5 12 8 5 4 1 Fr
ance
Fran
ceAccountant 2 6 4 4 1 3 1 3 5 5 1 3
Lawyer 2 3 1 2 2 8 4 2 1 2 2 0 Sp
ain
Spai
nFriends and family 21 22 30 28 24 26 18 24 26 20 25 24
None of these P
olan
dP
olan
dNot applicable 21 7 16 18 19 13 17 15 14 9 5 41
Hun
gary
Hun
gary
Chart 13 Most young workers feel their employer should provide some kind of pension Q In the future what if anything should employers do to help people plan for retirement
Uni
ted
Uni
ted
Stat
esSt
ates
Cana
daCa
nada
Chin
aCh
ina
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 Ja
pan
Japa
n Employers should be required to 24 43 20 40 21 26 20 28 37 34 20 30 contribute to workersrsquo pensions
Employers should be required to make a pension available but not to 12 13 7 17 20 15 15 4 11 14 22 5 contribute into it
Employers should not be required to provide pensions but should 15 9 12 8 9 8 11 6 11 9 9 11 provide information on how to plan for retirement
Employers should provide a range of flexible benefits and 13 18 18 16 15 27 25 28 21 22 45 12 allow individuals to choose which benefits they actually want
Nothing ndash it should be left to individual employees to take care 2 2 5 1 4 3 3 5 6 5 1 9 of themselves
Nothing ndash it should be left to the government to take care of its 2 5 5 2 5 8 15 14 1 4 0 4 citizens
Donrsquot know 30 10 32 17 27 12 12 15 13 13 3 29
The Young Pragmatic and Penniless Generation | 42
Chart 14 Workplace pensions are relatively low down in young workersrsquo priorities when choosing a job Q How important to you would the following workplace benefits be if you were choosing your next job
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsBasic salary 86 93 88 91 88 92 90 94 90 93 96 94
Holiday entitlement 87 94 89 91 92 94 91 94 93 94 96 91 G
erm
any
Ger
man
yOvertime and bonus pay 86 93 87 88 89 90 89 94 90 91 97 90
Location of workplace 88 91 86 92 89 90 89 92 93 93 92 86 Sw
eden
Swed
enMedical health insurance 73 92 84 65 86 87 88 87 93 94 98 83
Opportunities for career progression 86 91 81 90 90 94 91 94 92 91 96 81 U
nite
dU
nite
dAccess to a workplace retirement 85 85 81 82
Kin
gdom
78 84 80 78 84 86 93 74 K
ingd
omplan with employer contributions
Access to good training provision 85 87 85 88 86 91 85 93 86 90 95 74 Fr
ance
Fran
ceFlexible working hours 79 87 58 86 81 89 81 87 91 91 92 57
Life insurance 72 75 79 69 80 82 Sp
ain
84 80 81 88 93 74 Sp
ain
(death in service benefits)
Phased retirement or other employer programs providing for 74 54 75 71 72 81 76 74 76 81 91 65
Pol
and
Pol
and
a transition into retirement
Ability to work past the normal 68 57 64 65 64 74 72 65 74 76 80 70 retirement age H
unga
ryH
unga
ry
Access to a workplace retirement 62 74 61 68 59 77 61 47 68 74 89 65 plan without employer contributions U
nite
dU
nite
dSt
ates
Stat
esEmployee share plans 50 72 54 65 59 73 61 51 64 73 91 55
Access to creche help with the 67 75 64 56 69 79 75 83 58 69 89 68 cost of childcare Ca
nada
Cana
da
Opportunities for foreign travel 53 54 60 55 50 71 58 66 57 61 79 37
Company car 51 46 45 47 49 63 51 49 36 49 69 Ch
ina
39 Ch
ina
Japa
n Ja
pan
Chart 15 Young workers think the state pension will need to be reformed Q With the cost of government pensions becoming a greater concern as people live longer which if any of the following do you think
the government should undertake
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
The government should reduce the overall cost of state pension 15 33 16 15 16 20 28 22 21 26 30 16 provision by reducing the value of individual pension plans
The government should increase overall funding available for the 12 21 30 22 14 34 19 26 21 18 29 10 state pension through raising taxes
43 | The Young Pragmatic and Penniless Generation
he government should take a alanced approach with some 27 26 12 30 28 23 24 16 34 31 38 41 eductions in individual payments nd some increases in tax
he government should not do nything State pension provision 7 2 12 5 3 4 3 3 5 4 0 5 ill remain perfectly affordable in he future
onrsquot know 38 19 29 29 39 20 26 34 19 21 4 28
Net
herl
ands
art 16 Products which protect against investment risk are the most important to young workers ( interested) Thinking about the types of financial products you could purchase to help provide you with security in retirement on a scale of 1 to 5
how interested are you in the following options G
erm
any
Swed
en
Uni
ted
Kin
gdom
ase 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 Fr
ance
100 100 100 100 100 100 100 100 100 100 100 100
product providing a guaranteed etirement income stream or 75 81 73 76 74 83 78 76 87 85 94 69
Spai
nifetime income in retirement
product which protects my 74 79 73 76 72 82 77 74 84 86 94 65 etirement income against inflation P
olan
d
product which guarantees that I 72 82 73 78 75 81 76 73 86 86 90 67 onrsquot lose my initial investment H
unga
ry product which helps meet the ost of long-term care if I become 74 79 74 77 70 79 76 71 86 85 84 66
Uni
ted
nable to look after myself St
ates
product which protects my capital 71 81 71 76 68 76 77 73 84 83 93 65 rom poor investment returns Ca
nada
product which generates a etirement income and allows 69 78 71 75 68 81 77 72 84 86 94 70 e to take a lump sum from the
Chin
anvestment should I need to
product where the annual 66 78 68 75 72 79 77 70 85 86 87 64 anagement charges are kept low Ja
pan
product which enables me to eep some control over how my 71 73 70 75 72 80 75 69 88 85 91 63 avings are invested during my etirement
product which manages the sset allocation so that I am never 68 70 67 73 66 76 71 67 80 83 95 60 xposed to a level of risk Irsquom not omfortable with
product which continues to rovide a retirement income to my 74 78 71 75 73 81 79 73 86 82 94 60 pouse in the event that I die first
product which protects my family gainst having to pay estate taxes 73 76 71 74 75 81 75 69 82 82 89 56 hen I die
product which locks in investment 72 71 63 73 64 71 59 56 81 84 89 61 eturns during the good years
Tbra
Tawt
D
ChQ
B
Arl
Ar
Ad
Acu
Af
Armi
Am
Aksr
Aaec
Aps
Aaw
Ar
The Young Pragmatic and Penniless Generation | 44
Countr y Index score
Germany 548
China 541
Canada 524
United States 519
The Netherlands 488
United Kingdom 486
Sweden 483
France 475
Hungar y 473
Poland 463
Spain 440
Japan 430
Total 489
Appendix 1 Aegon Retirement Readiness Index (ARRI) - technical note
Aegon Retirement Readiness Index (ARRI)-technical note 2013 Weightings (2012 in brackets) A sample of 12000 pre and post retirees was drawn from 1 Personal responsibilit y 20 (30)
twelve countries Of these 10800 (90) were pre-retirees 2 Level of awareness 30 (35)
and these were chosen for fur ther analysis of their plans 3 Financial capability Understanding 30 (25)
for retirement The Index that was developed forms an 4 Retirement planning 50 (50)
assessment of how well an individual perceives the adequacy 5 Financial preparedness 60 (60)
of his her own finances and financial awareness specifically 6 Income replacement 35 (35)
for addressing his retirement needs
Note that the weights devised to show the relative
The lsquotargetrsquo for the Index impor tance of each question in calculating the Index add to
The question on current savings activity was designated as the 225 These were then re-scaled so that a final scale of 1 to
target question (dependent variable) for predicting the level of 10 was calculated
preparedness for retirement Responses to this question were
then correlated with each of the six key questions (variables) Final scores by country below to understand which were driving the activity These weightings were multiplied by the actual scores for each
This was done because it was not felt to be correct to give respondent for each of the six Index questions and aggregated
each of the six variables described below an equal weight as to obtain a provisional score This was then adjusted to
they appeared to have quite different relationships to the give countr y scores out of 1 to 10 (A score of 1 to 10 had
target question sufficient differentiation to be used as the scale for analysis)
1 Personal responsibilit y for income in retirement
2 Level of awareness of need to plan for retirement
3 F inancial capability Understanding of financial matters
regarding plans for retirement
4 Retirement planning Level of development of plans
5 Financial preparedness for retirement
6 Income replacement Level of projected income replacement
The weighting To estimate the statistical significance of the decline in overall
scores in this yearrsquos Index is theoretically incalculable
Two things have changed from 2012 to 2013
1 C anada and China have joined the sample
2 The new countries have thus influenced the weights of
emphasis placed on the 6 variables used to calculate
the score hence the weights attached to the complex
calculation have changed
However it is noticeable that for countries which were sampled
in both time periods the mean scores for the six individual
variables have almost invariably declined and on average more
than half of them have shown a significant level of decline
In particular the question lsquoDo you think you will achieve this
incomersquo has for all countries shown a significant level of
decline We thus hypothesize that the comparative results
show a significant decline
The Young Pragmatic and Penniless Generation | 36
Net
herl
ands
Net
herl
ands
Net
herl
ands
Ger
man
yG
erm
any
Ger
man
yBase 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
Better off 7 4 23 Sw
eden
Swed
en11 5 7 8 3 11 14 50 5
Swed
en
About the same 19 18 27 23 8 19 18 13 29 29 24 21 U
ntie
dU
ntie
dU
nite
d Worse off 66 74 41 58 79 69 71 76 51 47 21 55
Kin
gdom
Kin
gdom
Kin
gdom
Donrsquot know 9 3 9 9 9 4 4 8 9 10 6 19
Fran
ceFr
ance
Fran
ce
Chart 2 Education of 20 ndash 29 year olds by country Q Please choose from the following list the highest level of educational or professional qualification you have
Spai
nSp
ain
Spa
in
Pol
and
Pol
and
Pol
and
Hun
gary
Hun
gary
Hun
gar y
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
dU
nite
d 100 100 100 100 100 100 100 100 100
Stat
es100 100 100
Stat
esSt
ates
Less than high school graduate 2 44 6 14 1 3 2 7 1 3 Ca
nada
Cana
daC
anad
aHigh school graduate 11 33 53 23 22 22 4 41 14 21 1 2
Some college or trade school 46 2 9 9 9 19 37 14 28 20 4 33 Ch
ina
Chin
aC
hina
College degree University degree 31 15 27 30 41 43 21 33 50 46 9 57
Postgraduate degree or 8 3 3 23 25 11 36 1 8 9 80 6 qualification Ja
pan
Japa
n Ja
pan
Other 2 4 1 1 1 2 0 5 0 6 2
None 0 1 1 0 1 0 0
NET Less than undergrad degree 61 82 70 47 34 46 43 66 42 45 11 37
NET Undergrad degree or higher 39 18 30 53 66 54 57 34 58 55 89 63
Chart 3 Aegon Retirement Readiness Index scores for young employees by country
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
NET Low Index (0-5) 80 64 79 81 85 78 81 73 65 61 61 87
NET Medium Index (6-7) 15 30 18 15 14 21 17 23 25 31 31 12
NET High Index (8-10) 4 6 3 3 1 2 2 4 10 8 7 1
Appendix 2 Country comparisons Chart 1 The majority of young employees believe that they will be worse off in retirement compared to their parents Q Do you think that future generations of retirees will be better off or worse off than those currently in retirement
37 | The Young Pragmatic and Penniless Generation
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsI always make sure that 27 34 27 26 17 14 19 22 35 33 32 20 I am saving for retirement
I only save for retirement G
erm
any
Ger
man
y21 27 20 13 17 21 16 6 17 24 20 24 occasionally from time to time
I am not saving for retirement now 6 11 8 11 5 15 9 4 10 8 9 5 although I have in the past Sw
eden
Swed
en
I am not saving for retirement 35 23 34 46 53 40 49 54 36 33 38 46 though I do intend to U
nite
dU
ntie
dK
ingd
omK
ingd
om I have never saved for retirement and 11 6 10 5 8 10 6 13 3 2 1 6 donrsquot intend to
Fran
ceFr
ance
Chart 5 Younger people are more likely not to be using any means of retirement savings Sp
ain
Spai
nQ Which financial means if any are you currently using to prepare for your retirement
Pol
and
Pol
and
only asked in Germany only asked in Spain
Hun
gary
Hun
gary
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
dSt
ates
Stat
es100 100 100 100 100 100 100 100 100 100 100 100
Defined benefit plan 16 10 25 29 15 3 76 11 20 13 5 Ca
nada
Cana
daDefined contribution plan 28 10 17 19 19 14 10 23 40 7 3
Private pension 8 18 14 10 5 9 4 13 12 40 66 4 Ch
ina
Chin
a Government pension social security 12 43 14 21 8 7 4 18 27 33 71 35
Stocks 5 12 14 7 4 17 7 2 13 10 23 9
Bonds 1 8 5 6 2 16 4 2 8 13 14 3 Ja
pan
Japa
n
Mutual funds 2 14 23 4 2 10 3 4 7 16 9 6
Investment insurances (annuities) 2 3 2 3 2 9 4 5 2 4 6 1
Savings accounts 23 37 38 25 23 6 29 15 36 37 65 36
Investment property 2 10 6 7 9 2 5 2 5 11 18 1
Employee stock purchase 1 1 1 4 1 29 0 4 1 7 1
My home 10 5 8 7 7 8 4 6 6 14 30 1
Reverse mortgage 1 4 2 4
My business 2 1 3 2 2 4 1 1 2 4 12 1
Inheritance 3 11 7 11 7 9 9 8 7 9 6 2
Annuities 1 15 2 2 1 4 3 2 1 2 8
Long-term care insurance 2 1 3 2 9 5 1 6 4 7 1
Life insurance 6 11 8 8 14 3 18 15 19 18 36 17
Unterstuumltzungskasse aus 2 Eigenmitteln finanziert
Unterstuumltzungskasse vom 2 Arbeitgeber finanziert
Chart 4 Younger employees are much more likely to aspire to save for retirement Which of the following best explains your approach to saving for retirement This can include money you contribute to any long-term
investment including pensions stocks and shares investment-linked insurances property etc
Q
The Young Pragmatic and Penniless Generation | 38
Plan de empleo mixto 2 (combinacioacuten de las dos anteriores)
Other 1 6 4 0 1 2 2 3 2 2 3 3
None nothing 8 14 12 23 25 31 6 27 21 17 3 24
Donrsquot know 29 6 17 13 19 8 4 9 7 7 0 9
hart 6 The younger generation has more negative associations of retirement Which if any of the following words do you most associate with retirement
Net
herl
ands
Net
herl
ands
Ger
man
yG
erm
any
Swed
enSw
eden
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
d100 100 100 100 100 100 100 100 100 100 100 100
Kin
gdom
Kin
gdom
Freedom 35 32 36 39 19 26 11 20 35 40 37 33
Opportunity 7 27 25 18 4 8 9 10 17 16 9 16 Fr
ance
Fran
ceLeisure 58 48 36 41 23 24 43 32 50 50 55 6
Excitement 2 5 3 8 2 6 1 2 17 17 4 3 Sp
ain
Spai
nPoverty 11 26 23 11 26 14 37 44 7 5 6 20
Insecurity 34 24 18 16 20 18 35 56 10 9 18 44 P
olan
dP
olan
dLoneliness 4 10 17 16 12 7 11 8 5 9 20 12
Ill health 2 19 7 14 15 9 49 23 6 6 29 11 H
unga
ryH
unga
ryDependent on others 11 11 5 18 14 8 18 19 14 6 11 4
Tired 3 4 8 10 14 10 17 6 7 7 13 19 U
nite
dU
nite
dFar away 38 19 25 21 61 32 2 13 33
Stat
es33 14 22
Stat
es
Boredom 14 16 6 12 16 12 15 8 12 12 16 17 Ca
nada
Cana
daEnjoyment 21 16 17 23 14 29 5 3 37 37 35 15
None of the above 0 1 1 2 0 2 1 1 2 2 1 2
Donrsquot know 2 2 3 3 2 2 1 2 0 Ch
ina
6 Ch
ina
hart 7 Many young employees think they are not on course to achieve target retirement income Ja
pan
Japa
n Do you think you will achieve this income [your estimated income needed in retirement]
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
I donrsquot know if I am on course to 56 37 57 59 50 39 49 48 48 41 22 68 achieve my retirement income
No I am on course to achieve around one-quarter (25) of my 10 14 9 13 15 14 14 13 10 10 10 7 retirement income
No I am on course to achieve around 12 20 14 11 19 19 18 15 12 11 23 12 half of my retirement income
No I am on course to achieve around three-quarters (75) of my 8 14 7 4 8 15 9 8 6 11 20 5 retirement income
Yes I am on course to achieve my 15 15 13 14 8 13 11 17 25 27 25 8 retirement income
CQ
CQ
39 | The Young Pragmatic and Penniless Generation
Chart 8 Young people in most countries expect to retire before 65 Q At what age do you expect to retire from all paid employment
Net
herl
ands
Ger
man
y
Swed
en
Uni
ted
Kin
gdom
Fran
ce
Spai
n
Pol
and
Hun
gary
Uni
ted
Stat
es
Cana
da
Chin
a
Japa
n
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
40 or under 0 1 1 0 0 1 3 1 5 12
41-50 1 2 3 5 2 2 6 3 9 4 37 9
51-59 4 4 4 6 2 4 11 5 7 10 30 1
60 5 11 8 12 10 13 19 12 12 16 21 27
61-64 2 11 10 2 20 7 4 13 5 3 1 2
65 17 22 44 31 34 32 16 26 26 32 3 25
66-69 42 32 15 9 12 29 20 13 9 9 0 1
70 19 11 10 18 10 5 10 9 13 12 0 6
71+ 5 5 5 9 4 5 5 3 7 5 1 4
Never 2 1 1 2 2 2 6 4 1 0 0
Donrsquot know 2 3 2 5 3 2 8 9 5 5 1 13
Mean 67 65 65 65 64 65 63 64 63 64 53 59
Median 67 65 65 65 65 65 65 65 65 65 55 60
Chart 9 Younger employees feel they donrsquot have money to invest for retirement Q What is the single biggest obstacle to you saving for retirement right now
Net
herl
ands
Ger
man
y
Swed
en
Uni
ted
Kin
gdom
Fran
ce
Spai
n
Pol
and
Hun
gary
Uni
ted
Stat
es
Cana
da
Chin
a
Japa
n
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
The uncertain economic environment 19 8 13 9 13 19 11 14 12 9 29 27
Lack of money to invest 28 41 33 43 47 34 48 55 47 50 6 19
Fear of poor investment returns over the coming years 2 5 10 7 5 6 8 2 6 8 14 6
Complexity of investment products 4 4 4 3 5 3 5 2 12 5
I donrsquot know how to go about investing for the long-term 2 3 10 8 5 5 3 3 6 8 7 9
The fees charged by financial services companies 2 4 4 2 4 3 4 2 3 5 2 5
I canrsquot afford to take financial advice 3 3 6 8 2 4 3 5 3 2 3 2
I donrsquot trust the financial services industry 12 11 8 6 5 10 6 2 2 3 5 4
I donrsquot see the need to save for the long-term 6 1 2 2 3 3 3 1 2 1 4 3
Concerns about unstable currencies currency fluctuations 2 5 1 3 3 3 4 3 4 5 15 2
Other (PLEASE STATE) 3 3 1 1 3 2 4 6 2 2 1
Donrsquot know 17 12 11 7 8 6 3 6 8 6 3 17
The Young Pragmatic and Penniless Generation | 40
Chart 10 More money would incentivize young employees to save for retirement Q Which if any of the following would encourage you to save for retirement
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsMore generous tax breaks on long-term savings and pensions 20 44 30 32 27 23 42 42 33 43 40 32 products
Ger
man
yG
erm
any
Access to financial education so that I am more aware of what 24 6 14 21 16 22 21 12 23 24 43 25 I need to do for myself
Swed
enSw
eden
Access to professional financial advice so that I have personalized
Uni
ted
20 24 23 23 15 21 25 9 22 23 44 13 U
nite
drecommendations on what steps
Kin
gdom
Kin
gdom
I need to take
Simpler investment products that 12 33 19 28 20 Fr
ance
18 27 16 32 28 36 10 Fr
ance
I can understand with less jargon
Better and more frequent information about my retirement 16 28 20 27 27 23
Spai
n20 18 25 31 45 22
Spai
nsavings
Better legal protection in case I am 12 18 13 18 10 24 18 13 13 19 21 6 P
olan
dP
olan
dsold the wrong product
A pay rise 46 54 44 64 55 50 70 72 67 64 53 37
A better retirement plan pension H
unga
ryH
unga
ry27 32 25 33 29 26 42 35 39 44 33 32 match from my employer
Other 4 2 1 1 2 2 3 3 2 U
nite
d3 0
Uni
ted
Stat
esSt
ates
Donrsquot know 17 9 16 10 10 12 3 8 8 5 3 17
Not applicable - I already have 3 3 4 2 2 1 1 1 2 2 3 sufficient savings Ca
nada
Cana
da
Chin
aCh
ina
Chart 11 A majority of younger employees do not have a written plan for retirement Q Which of the following best describes your retirement planning strategy
Japa
n Ja
pan
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
I have a written plan 7 18 10 9 6 8 6 5 13 10 8 4
I have a plan but it is not written 24 47 37 25 23 31 29 31 37 44 55 24
down
I do not have a plan 61 32 51 61 62 55 62 58 45 42 34 61
Donrsquot know 7 3 3 5 8 6 3 6 4 4 3 12
41 | The Young Pragmatic and Penniless Generation
Chart 12 For young employees friends and family are the leading source of retirement savings information Q And which of these sources (of information) is most important to you
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
Bank adviser 6 11 19 5 25 5 7 4 3 17 10 2 N
ethe
rlan
dsN
ethe
rlan
dsProfessional financial adviser 12 22 10 12 10 19 19 22 21 25 19 10
Insurance agent spokesperson 3 10 2 3 1 3 6 2 3 0 3 2 G
erm
any
Ger
man
yInsurance company website 3 1 3 2 4 4 2 2 1 3 1
Personal finance websites online 8 5 7 8 5 4 10 8 12 6 10 8 retirement planning tools Sw
eden
Swed
enPersonal finance media 2 2 2 2 2 6 3 1 2 1 6 2
Government website 7 1 3 6 U
nite
d5 2 3 3 2 3 7 1
Uni
ted
Kin
gdom
Kin
gdom
Bank website 2 3 3 2 1 0 3 2 1 6 3 3
My employer 12 8 4 9 4 7 5 12 8 5 4 1 Fr
ance
Fran
ceAccountant 2 6 4 4 1 3 1 3 5 5 1 3
Lawyer 2 3 1 2 2 8 4 2 1 2 2 0 Sp
ain
Spai
nFriends and family 21 22 30 28 24 26 18 24 26 20 25 24
None of these P
olan
dP
olan
dNot applicable 21 7 16 18 19 13 17 15 14 9 5 41
Hun
gary
Hun
gary
Chart 13 Most young workers feel their employer should provide some kind of pension Q In the future what if anything should employers do to help people plan for retirement
Uni
ted
Uni
ted
Stat
esSt
ates
Cana
daCa
nada
Chin
aCh
ina
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 Ja
pan
Japa
n Employers should be required to 24 43 20 40 21 26 20 28 37 34 20 30 contribute to workersrsquo pensions
Employers should be required to make a pension available but not to 12 13 7 17 20 15 15 4 11 14 22 5 contribute into it
Employers should not be required to provide pensions but should 15 9 12 8 9 8 11 6 11 9 9 11 provide information on how to plan for retirement
Employers should provide a range of flexible benefits and 13 18 18 16 15 27 25 28 21 22 45 12 allow individuals to choose which benefits they actually want
Nothing ndash it should be left to individual employees to take care 2 2 5 1 4 3 3 5 6 5 1 9 of themselves
Nothing ndash it should be left to the government to take care of its 2 5 5 2 5 8 15 14 1 4 0 4 citizens
Donrsquot know 30 10 32 17 27 12 12 15 13 13 3 29
The Young Pragmatic and Penniless Generation | 42
Chart 14 Workplace pensions are relatively low down in young workersrsquo priorities when choosing a job Q How important to you would the following workplace benefits be if you were choosing your next job
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsBasic salary 86 93 88 91 88 92 90 94 90 93 96 94
Holiday entitlement 87 94 89 91 92 94 91 94 93 94 96 91 G
erm
any
Ger
man
yOvertime and bonus pay 86 93 87 88 89 90 89 94 90 91 97 90
Location of workplace 88 91 86 92 89 90 89 92 93 93 92 86 Sw
eden
Swed
enMedical health insurance 73 92 84 65 86 87 88 87 93 94 98 83
Opportunities for career progression 86 91 81 90 90 94 91 94 92 91 96 81 U
nite
dU
nite
dAccess to a workplace retirement 85 85 81 82
Kin
gdom
78 84 80 78 84 86 93 74 K
ingd
omplan with employer contributions
Access to good training provision 85 87 85 88 86 91 85 93 86 90 95 74 Fr
ance
Fran
ceFlexible working hours 79 87 58 86 81 89 81 87 91 91 92 57
Life insurance 72 75 79 69 80 82 Sp
ain
84 80 81 88 93 74 Sp
ain
(death in service benefits)
Phased retirement or other employer programs providing for 74 54 75 71 72 81 76 74 76 81 91 65
Pol
and
Pol
and
a transition into retirement
Ability to work past the normal 68 57 64 65 64 74 72 65 74 76 80 70 retirement age H
unga
ryH
unga
ry
Access to a workplace retirement 62 74 61 68 59 77 61 47 68 74 89 65 plan without employer contributions U
nite
dU
nite
dSt
ates
Stat
esEmployee share plans 50 72 54 65 59 73 61 51 64 73 91 55
Access to creche help with the 67 75 64 56 69 79 75 83 58 69 89 68 cost of childcare Ca
nada
Cana
da
Opportunities for foreign travel 53 54 60 55 50 71 58 66 57 61 79 37
Company car 51 46 45 47 49 63 51 49 36 49 69 Ch
ina
39 Ch
ina
Japa
n Ja
pan
Chart 15 Young workers think the state pension will need to be reformed Q With the cost of government pensions becoming a greater concern as people live longer which if any of the following do you think
the government should undertake
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
The government should reduce the overall cost of state pension 15 33 16 15 16 20 28 22 21 26 30 16 provision by reducing the value of individual pension plans
The government should increase overall funding available for the 12 21 30 22 14 34 19 26 21 18 29 10 state pension through raising taxes
43 | The Young Pragmatic and Penniless Generation
he government should take a alanced approach with some 27 26 12 30 28 23 24 16 34 31 38 41 eductions in individual payments nd some increases in tax
he government should not do nything State pension provision 7 2 12 5 3 4 3 3 5 4 0 5 ill remain perfectly affordable in he future
onrsquot know 38 19 29 29 39 20 26 34 19 21 4 28
Net
herl
ands
art 16 Products which protect against investment risk are the most important to young workers ( interested) Thinking about the types of financial products you could purchase to help provide you with security in retirement on a scale of 1 to 5
how interested are you in the following options G
erm
any
Swed
en
Uni
ted
Kin
gdom
ase 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 Fr
ance
100 100 100 100 100 100 100 100 100 100 100 100
product providing a guaranteed etirement income stream or 75 81 73 76 74 83 78 76 87 85 94 69
Spai
nifetime income in retirement
product which protects my 74 79 73 76 72 82 77 74 84 86 94 65 etirement income against inflation P
olan
d
product which guarantees that I 72 82 73 78 75 81 76 73 86 86 90 67 onrsquot lose my initial investment H
unga
ry product which helps meet the ost of long-term care if I become 74 79 74 77 70 79 76 71 86 85 84 66
Uni
ted
nable to look after myself St
ates
product which protects my capital 71 81 71 76 68 76 77 73 84 83 93 65 rom poor investment returns Ca
nada
product which generates a etirement income and allows 69 78 71 75 68 81 77 72 84 86 94 70 e to take a lump sum from the
Chin
anvestment should I need to
product where the annual 66 78 68 75 72 79 77 70 85 86 87 64 anagement charges are kept low Ja
pan
product which enables me to eep some control over how my 71 73 70 75 72 80 75 69 88 85 91 63 avings are invested during my etirement
product which manages the sset allocation so that I am never 68 70 67 73 66 76 71 67 80 83 95 60 xposed to a level of risk Irsquom not omfortable with
product which continues to rovide a retirement income to my 74 78 71 75 73 81 79 73 86 82 94 60 pouse in the event that I die first
product which protects my family gainst having to pay estate taxes 73 76 71 74 75 81 75 69 82 82 89 56 hen I die
product which locks in investment 72 71 63 73 64 71 59 56 81 84 89 61 eturns during the good years
Tbra
Tawt
D
ChQ
B
Arl
Ar
Ad
Acu
Af
Armi
Am
Aksr
Aaec
Aps
Aaw
Ar
The Young Pragmatic and Penniless Generation | 44
Net
herl
ands
Net
herl
ands
Net
herl
ands
Ger
man
yG
erm
any
Ger
man
yBase 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
Better off 7 4 23 Sw
eden
Swed
en11 5 7 8 3 11 14 50 5
Swed
en
About the same 19 18 27 23 8 19 18 13 29 29 24 21 U
ntie
dU
ntie
dU
nite
d Worse off 66 74 41 58 79 69 71 76 51 47 21 55
Kin
gdom
Kin
gdom
Kin
gdom
Donrsquot know 9 3 9 9 9 4 4 8 9 10 6 19
Fran
ceFr
ance
Fran
ce
Chart 2 Education of 20 ndash 29 year olds by country Q Please choose from the following list the highest level of educational or professional qualification you have
Spai
nSp
ain
Spa
in
Pol
and
Pol
and
Pol
and
Hun
gary
Hun
gary
Hun
gar y
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
dU
nite
d 100 100 100 100 100 100 100 100 100
Stat
es100 100 100
Stat
esSt
ates
Less than high school graduate 2 44 6 14 1 3 2 7 1 3 Ca
nada
Cana
daC
anad
aHigh school graduate 11 33 53 23 22 22 4 41 14 21 1 2
Some college or trade school 46 2 9 9 9 19 37 14 28 20 4 33 Ch
ina
Chin
aC
hina
College degree University degree 31 15 27 30 41 43 21 33 50 46 9 57
Postgraduate degree or 8 3 3 23 25 11 36 1 8 9 80 6 qualification Ja
pan
Japa
n Ja
pan
Other 2 4 1 1 1 2 0 5 0 6 2
None 0 1 1 0 1 0 0
NET Less than undergrad degree 61 82 70 47 34 46 43 66 42 45 11 37
NET Undergrad degree or higher 39 18 30 53 66 54 57 34 58 55 89 63
Chart 3 Aegon Retirement Readiness Index scores for young employees by country
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
NET Low Index (0-5) 80 64 79 81 85 78 81 73 65 61 61 87
NET Medium Index (6-7) 15 30 18 15 14 21 17 23 25 31 31 12
NET High Index (8-10) 4 6 3 3 1 2 2 4 10 8 7 1
Appendix 2 Country comparisons Chart 1 The majority of young employees believe that they will be worse off in retirement compared to their parents Q Do you think that future generations of retirees will be better off or worse off than those currently in retirement
37 | The Young Pragmatic and Penniless Generation
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsI always make sure that 27 34 27 26 17 14 19 22 35 33 32 20 I am saving for retirement
I only save for retirement G
erm
any
Ger
man
y21 27 20 13 17 21 16 6 17 24 20 24 occasionally from time to time
I am not saving for retirement now 6 11 8 11 5 15 9 4 10 8 9 5 although I have in the past Sw
eden
Swed
en
I am not saving for retirement 35 23 34 46 53 40 49 54 36 33 38 46 though I do intend to U
nite
dU
ntie
dK
ingd
omK
ingd
om I have never saved for retirement and 11 6 10 5 8 10 6 13 3 2 1 6 donrsquot intend to
Fran
ceFr
ance
Chart 5 Younger people are more likely not to be using any means of retirement savings Sp
ain
Spai
nQ Which financial means if any are you currently using to prepare for your retirement
Pol
and
Pol
and
only asked in Germany only asked in Spain
Hun
gary
Hun
gary
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
dSt
ates
Stat
es100 100 100 100 100 100 100 100 100 100 100 100
Defined benefit plan 16 10 25 29 15 3 76 11 20 13 5 Ca
nada
Cana
daDefined contribution plan 28 10 17 19 19 14 10 23 40 7 3
Private pension 8 18 14 10 5 9 4 13 12 40 66 4 Ch
ina
Chin
a Government pension social security 12 43 14 21 8 7 4 18 27 33 71 35
Stocks 5 12 14 7 4 17 7 2 13 10 23 9
Bonds 1 8 5 6 2 16 4 2 8 13 14 3 Ja
pan
Japa
n
Mutual funds 2 14 23 4 2 10 3 4 7 16 9 6
Investment insurances (annuities) 2 3 2 3 2 9 4 5 2 4 6 1
Savings accounts 23 37 38 25 23 6 29 15 36 37 65 36
Investment property 2 10 6 7 9 2 5 2 5 11 18 1
Employee stock purchase 1 1 1 4 1 29 0 4 1 7 1
My home 10 5 8 7 7 8 4 6 6 14 30 1
Reverse mortgage 1 4 2 4
My business 2 1 3 2 2 4 1 1 2 4 12 1
Inheritance 3 11 7 11 7 9 9 8 7 9 6 2
Annuities 1 15 2 2 1 4 3 2 1 2 8
Long-term care insurance 2 1 3 2 9 5 1 6 4 7 1
Life insurance 6 11 8 8 14 3 18 15 19 18 36 17
Unterstuumltzungskasse aus 2 Eigenmitteln finanziert
Unterstuumltzungskasse vom 2 Arbeitgeber finanziert
Chart 4 Younger employees are much more likely to aspire to save for retirement Which of the following best explains your approach to saving for retirement This can include money you contribute to any long-term
investment including pensions stocks and shares investment-linked insurances property etc
Q
The Young Pragmatic and Penniless Generation | 38
Plan de empleo mixto 2 (combinacioacuten de las dos anteriores)
Other 1 6 4 0 1 2 2 3 2 2 3 3
None nothing 8 14 12 23 25 31 6 27 21 17 3 24
Donrsquot know 29 6 17 13 19 8 4 9 7 7 0 9
hart 6 The younger generation has more negative associations of retirement Which if any of the following words do you most associate with retirement
Net
herl
ands
Net
herl
ands
Ger
man
yG
erm
any
Swed
enSw
eden
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
d100 100 100 100 100 100 100 100 100 100 100 100
Kin
gdom
Kin
gdom
Freedom 35 32 36 39 19 26 11 20 35 40 37 33
Opportunity 7 27 25 18 4 8 9 10 17 16 9 16 Fr
ance
Fran
ceLeisure 58 48 36 41 23 24 43 32 50 50 55 6
Excitement 2 5 3 8 2 6 1 2 17 17 4 3 Sp
ain
Spai
nPoverty 11 26 23 11 26 14 37 44 7 5 6 20
Insecurity 34 24 18 16 20 18 35 56 10 9 18 44 P
olan
dP
olan
dLoneliness 4 10 17 16 12 7 11 8 5 9 20 12
Ill health 2 19 7 14 15 9 49 23 6 6 29 11 H
unga
ryH
unga
ryDependent on others 11 11 5 18 14 8 18 19 14 6 11 4
Tired 3 4 8 10 14 10 17 6 7 7 13 19 U
nite
dU
nite
dFar away 38 19 25 21 61 32 2 13 33
Stat
es33 14 22
Stat
es
Boredom 14 16 6 12 16 12 15 8 12 12 16 17 Ca
nada
Cana
daEnjoyment 21 16 17 23 14 29 5 3 37 37 35 15
None of the above 0 1 1 2 0 2 1 1 2 2 1 2
Donrsquot know 2 2 3 3 2 2 1 2 0 Ch
ina
6 Ch
ina
hart 7 Many young employees think they are not on course to achieve target retirement income Ja
pan
Japa
n Do you think you will achieve this income [your estimated income needed in retirement]
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
I donrsquot know if I am on course to 56 37 57 59 50 39 49 48 48 41 22 68 achieve my retirement income
No I am on course to achieve around one-quarter (25) of my 10 14 9 13 15 14 14 13 10 10 10 7 retirement income
No I am on course to achieve around 12 20 14 11 19 19 18 15 12 11 23 12 half of my retirement income
No I am on course to achieve around three-quarters (75) of my 8 14 7 4 8 15 9 8 6 11 20 5 retirement income
Yes I am on course to achieve my 15 15 13 14 8 13 11 17 25 27 25 8 retirement income
CQ
CQ
39 | The Young Pragmatic and Penniless Generation
Chart 8 Young people in most countries expect to retire before 65 Q At what age do you expect to retire from all paid employment
Net
herl
ands
Ger
man
y
Swed
en
Uni
ted
Kin
gdom
Fran
ce
Spai
n
Pol
and
Hun
gary
Uni
ted
Stat
es
Cana
da
Chin
a
Japa
n
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
40 or under 0 1 1 0 0 1 3 1 5 12
41-50 1 2 3 5 2 2 6 3 9 4 37 9
51-59 4 4 4 6 2 4 11 5 7 10 30 1
60 5 11 8 12 10 13 19 12 12 16 21 27
61-64 2 11 10 2 20 7 4 13 5 3 1 2
65 17 22 44 31 34 32 16 26 26 32 3 25
66-69 42 32 15 9 12 29 20 13 9 9 0 1
70 19 11 10 18 10 5 10 9 13 12 0 6
71+ 5 5 5 9 4 5 5 3 7 5 1 4
Never 2 1 1 2 2 2 6 4 1 0 0
Donrsquot know 2 3 2 5 3 2 8 9 5 5 1 13
Mean 67 65 65 65 64 65 63 64 63 64 53 59
Median 67 65 65 65 65 65 65 65 65 65 55 60
Chart 9 Younger employees feel they donrsquot have money to invest for retirement Q What is the single biggest obstacle to you saving for retirement right now
Net
herl
ands
Ger
man
y
Swed
en
Uni
ted
Kin
gdom
Fran
ce
Spai
n
Pol
and
Hun
gary
Uni
ted
Stat
es
Cana
da
Chin
a
Japa
n
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
The uncertain economic environment 19 8 13 9 13 19 11 14 12 9 29 27
Lack of money to invest 28 41 33 43 47 34 48 55 47 50 6 19
Fear of poor investment returns over the coming years 2 5 10 7 5 6 8 2 6 8 14 6
Complexity of investment products 4 4 4 3 5 3 5 2 12 5
I donrsquot know how to go about investing for the long-term 2 3 10 8 5 5 3 3 6 8 7 9
The fees charged by financial services companies 2 4 4 2 4 3 4 2 3 5 2 5
I canrsquot afford to take financial advice 3 3 6 8 2 4 3 5 3 2 3 2
I donrsquot trust the financial services industry 12 11 8 6 5 10 6 2 2 3 5 4
I donrsquot see the need to save for the long-term 6 1 2 2 3 3 3 1 2 1 4 3
Concerns about unstable currencies currency fluctuations 2 5 1 3 3 3 4 3 4 5 15 2
Other (PLEASE STATE) 3 3 1 1 3 2 4 6 2 2 1
Donrsquot know 17 12 11 7 8 6 3 6 8 6 3 17
The Young Pragmatic and Penniless Generation | 40
Chart 10 More money would incentivize young employees to save for retirement Q Which if any of the following would encourage you to save for retirement
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsMore generous tax breaks on long-term savings and pensions 20 44 30 32 27 23 42 42 33 43 40 32 products
Ger
man
yG
erm
any
Access to financial education so that I am more aware of what 24 6 14 21 16 22 21 12 23 24 43 25 I need to do for myself
Swed
enSw
eden
Access to professional financial advice so that I have personalized
Uni
ted
20 24 23 23 15 21 25 9 22 23 44 13 U
nite
drecommendations on what steps
Kin
gdom
Kin
gdom
I need to take
Simpler investment products that 12 33 19 28 20 Fr
ance
18 27 16 32 28 36 10 Fr
ance
I can understand with less jargon
Better and more frequent information about my retirement 16 28 20 27 27 23
Spai
n20 18 25 31 45 22
Spai
nsavings
Better legal protection in case I am 12 18 13 18 10 24 18 13 13 19 21 6 P
olan
dP
olan
dsold the wrong product
A pay rise 46 54 44 64 55 50 70 72 67 64 53 37
A better retirement plan pension H
unga
ryH
unga
ry27 32 25 33 29 26 42 35 39 44 33 32 match from my employer
Other 4 2 1 1 2 2 3 3 2 U
nite
d3 0
Uni
ted
Stat
esSt
ates
Donrsquot know 17 9 16 10 10 12 3 8 8 5 3 17
Not applicable - I already have 3 3 4 2 2 1 1 1 2 2 3 sufficient savings Ca
nada
Cana
da
Chin
aCh
ina
Chart 11 A majority of younger employees do not have a written plan for retirement Q Which of the following best describes your retirement planning strategy
Japa
n Ja
pan
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
I have a written plan 7 18 10 9 6 8 6 5 13 10 8 4
I have a plan but it is not written 24 47 37 25 23 31 29 31 37 44 55 24
down
I do not have a plan 61 32 51 61 62 55 62 58 45 42 34 61
Donrsquot know 7 3 3 5 8 6 3 6 4 4 3 12
41 | The Young Pragmatic and Penniless Generation
Chart 12 For young employees friends and family are the leading source of retirement savings information Q And which of these sources (of information) is most important to you
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
Bank adviser 6 11 19 5 25 5 7 4 3 17 10 2 N
ethe
rlan
dsN
ethe
rlan
dsProfessional financial adviser 12 22 10 12 10 19 19 22 21 25 19 10
Insurance agent spokesperson 3 10 2 3 1 3 6 2 3 0 3 2 G
erm
any
Ger
man
yInsurance company website 3 1 3 2 4 4 2 2 1 3 1
Personal finance websites online 8 5 7 8 5 4 10 8 12 6 10 8 retirement planning tools Sw
eden
Swed
enPersonal finance media 2 2 2 2 2 6 3 1 2 1 6 2
Government website 7 1 3 6 U
nite
d5 2 3 3 2 3 7 1
Uni
ted
Kin
gdom
Kin
gdom
Bank website 2 3 3 2 1 0 3 2 1 6 3 3
My employer 12 8 4 9 4 7 5 12 8 5 4 1 Fr
ance
Fran
ceAccountant 2 6 4 4 1 3 1 3 5 5 1 3
Lawyer 2 3 1 2 2 8 4 2 1 2 2 0 Sp
ain
Spai
nFriends and family 21 22 30 28 24 26 18 24 26 20 25 24
None of these P
olan
dP
olan
dNot applicable 21 7 16 18 19 13 17 15 14 9 5 41
Hun
gary
Hun
gary
Chart 13 Most young workers feel their employer should provide some kind of pension Q In the future what if anything should employers do to help people plan for retirement
Uni
ted
Uni
ted
Stat
esSt
ates
Cana
daCa
nada
Chin
aCh
ina
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 Ja
pan
Japa
n Employers should be required to 24 43 20 40 21 26 20 28 37 34 20 30 contribute to workersrsquo pensions
Employers should be required to make a pension available but not to 12 13 7 17 20 15 15 4 11 14 22 5 contribute into it
Employers should not be required to provide pensions but should 15 9 12 8 9 8 11 6 11 9 9 11 provide information on how to plan for retirement
Employers should provide a range of flexible benefits and 13 18 18 16 15 27 25 28 21 22 45 12 allow individuals to choose which benefits they actually want
Nothing ndash it should be left to individual employees to take care 2 2 5 1 4 3 3 5 6 5 1 9 of themselves
Nothing ndash it should be left to the government to take care of its 2 5 5 2 5 8 15 14 1 4 0 4 citizens
Donrsquot know 30 10 32 17 27 12 12 15 13 13 3 29
The Young Pragmatic and Penniless Generation | 42
Chart 14 Workplace pensions are relatively low down in young workersrsquo priorities when choosing a job Q How important to you would the following workplace benefits be if you were choosing your next job
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsBasic salary 86 93 88 91 88 92 90 94 90 93 96 94
Holiday entitlement 87 94 89 91 92 94 91 94 93 94 96 91 G
erm
any
Ger
man
yOvertime and bonus pay 86 93 87 88 89 90 89 94 90 91 97 90
Location of workplace 88 91 86 92 89 90 89 92 93 93 92 86 Sw
eden
Swed
enMedical health insurance 73 92 84 65 86 87 88 87 93 94 98 83
Opportunities for career progression 86 91 81 90 90 94 91 94 92 91 96 81 U
nite
dU
nite
dAccess to a workplace retirement 85 85 81 82
Kin
gdom
78 84 80 78 84 86 93 74 K
ingd
omplan with employer contributions
Access to good training provision 85 87 85 88 86 91 85 93 86 90 95 74 Fr
ance
Fran
ceFlexible working hours 79 87 58 86 81 89 81 87 91 91 92 57
Life insurance 72 75 79 69 80 82 Sp
ain
84 80 81 88 93 74 Sp
ain
(death in service benefits)
Phased retirement or other employer programs providing for 74 54 75 71 72 81 76 74 76 81 91 65
Pol
and
Pol
and
a transition into retirement
Ability to work past the normal 68 57 64 65 64 74 72 65 74 76 80 70 retirement age H
unga
ryH
unga
ry
Access to a workplace retirement 62 74 61 68 59 77 61 47 68 74 89 65 plan without employer contributions U
nite
dU
nite
dSt
ates
Stat
esEmployee share plans 50 72 54 65 59 73 61 51 64 73 91 55
Access to creche help with the 67 75 64 56 69 79 75 83 58 69 89 68 cost of childcare Ca
nada
Cana
da
Opportunities for foreign travel 53 54 60 55 50 71 58 66 57 61 79 37
Company car 51 46 45 47 49 63 51 49 36 49 69 Ch
ina
39 Ch
ina
Japa
n Ja
pan
Chart 15 Young workers think the state pension will need to be reformed Q With the cost of government pensions becoming a greater concern as people live longer which if any of the following do you think
the government should undertake
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
The government should reduce the overall cost of state pension 15 33 16 15 16 20 28 22 21 26 30 16 provision by reducing the value of individual pension plans
The government should increase overall funding available for the 12 21 30 22 14 34 19 26 21 18 29 10 state pension through raising taxes
43 | The Young Pragmatic and Penniless Generation
he government should take a alanced approach with some 27 26 12 30 28 23 24 16 34 31 38 41 eductions in individual payments nd some increases in tax
he government should not do nything State pension provision 7 2 12 5 3 4 3 3 5 4 0 5 ill remain perfectly affordable in he future
onrsquot know 38 19 29 29 39 20 26 34 19 21 4 28
Net
herl
ands
art 16 Products which protect against investment risk are the most important to young workers ( interested) Thinking about the types of financial products you could purchase to help provide you with security in retirement on a scale of 1 to 5
how interested are you in the following options G
erm
any
Swed
en
Uni
ted
Kin
gdom
ase 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 Fr
ance
100 100 100 100 100 100 100 100 100 100 100 100
product providing a guaranteed etirement income stream or 75 81 73 76 74 83 78 76 87 85 94 69
Spai
nifetime income in retirement
product which protects my 74 79 73 76 72 82 77 74 84 86 94 65 etirement income against inflation P
olan
d
product which guarantees that I 72 82 73 78 75 81 76 73 86 86 90 67 onrsquot lose my initial investment H
unga
ry product which helps meet the ost of long-term care if I become 74 79 74 77 70 79 76 71 86 85 84 66
Uni
ted
nable to look after myself St
ates
product which protects my capital 71 81 71 76 68 76 77 73 84 83 93 65 rom poor investment returns Ca
nada
product which generates a etirement income and allows 69 78 71 75 68 81 77 72 84 86 94 70 e to take a lump sum from the
Chin
anvestment should I need to
product where the annual 66 78 68 75 72 79 77 70 85 86 87 64 anagement charges are kept low Ja
pan
product which enables me to eep some control over how my 71 73 70 75 72 80 75 69 88 85 91 63 avings are invested during my etirement
product which manages the sset allocation so that I am never 68 70 67 73 66 76 71 67 80 83 95 60 xposed to a level of risk Irsquom not omfortable with
product which continues to rovide a retirement income to my 74 78 71 75 73 81 79 73 86 82 94 60 pouse in the event that I die first
product which protects my family gainst having to pay estate taxes 73 76 71 74 75 81 75 69 82 82 89 56 hen I die
product which locks in investment 72 71 63 73 64 71 59 56 81 84 89 61 eturns during the good years
Tbra
Tawt
D
ChQ
B
Arl
Ar
Ad
Acu
Af
Armi
Am
Aksr
Aaec
Aps
Aaw
Ar
The Young Pragmatic and Penniless Generation | 44
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsI always make sure that 27 34 27 26 17 14 19 22 35 33 32 20 I am saving for retirement
I only save for retirement G
erm
any
Ger
man
y21 27 20 13 17 21 16 6 17 24 20 24 occasionally from time to time
I am not saving for retirement now 6 11 8 11 5 15 9 4 10 8 9 5 although I have in the past Sw
eden
Swed
en
I am not saving for retirement 35 23 34 46 53 40 49 54 36 33 38 46 though I do intend to U
nite
dU
ntie
dK
ingd
omK
ingd
om I have never saved for retirement and 11 6 10 5 8 10 6 13 3 2 1 6 donrsquot intend to
Fran
ceFr
ance
Chart 5 Younger people are more likely not to be using any means of retirement savings Sp
ain
Spai
nQ Which financial means if any are you currently using to prepare for your retirement
Pol
and
Pol
and
only asked in Germany only asked in Spain
Hun
gary
Hun
gary
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
dSt
ates
Stat
es100 100 100 100 100 100 100 100 100 100 100 100
Defined benefit plan 16 10 25 29 15 3 76 11 20 13 5 Ca
nada
Cana
daDefined contribution plan 28 10 17 19 19 14 10 23 40 7 3
Private pension 8 18 14 10 5 9 4 13 12 40 66 4 Ch
ina
Chin
a Government pension social security 12 43 14 21 8 7 4 18 27 33 71 35
Stocks 5 12 14 7 4 17 7 2 13 10 23 9
Bonds 1 8 5 6 2 16 4 2 8 13 14 3 Ja
pan
Japa
n
Mutual funds 2 14 23 4 2 10 3 4 7 16 9 6
Investment insurances (annuities) 2 3 2 3 2 9 4 5 2 4 6 1
Savings accounts 23 37 38 25 23 6 29 15 36 37 65 36
Investment property 2 10 6 7 9 2 5 2 5 11 18 1
Employee stock purchase 1 1 1 4 1 29 0 4 1 7 1
My home 10 5 8 7 7 8 4 6 6 14 30 1
Reverse mortgage 1 4 2 4
My business 2 1 3 2 2 4 1 1 2 4 12 1
Inheritance 3 11 7 11 7 9 9 8 7 9 6 2
Annuities 1 15 2 2 1 4 3 2 1 2 8
Long-term care insurance 2 1 3 2 9 5 1 6 4 7 1
Life insurance 6 11 8 8 14 3 18 15 19 18 36 17
Unterstuumltzungskasse aus 2 Eigenmitteln finanziert
Unterstuumltzungskasse vom 2 Arbeitgeber finanziert
Chart 4 Younger employees are much more likely to aspire to save for retirement Which of the following best explains your approach to saving for retirement This can include money you contribute to any long-term
investment including pensions stocks and shares investment-linked insurances property etc
Q
The Young Pragmatic and Penniless Generation | 38
Plan de empleo mixto 2 (combinacioacuten de las dos anteriores)
Other 1 6 4 0 1 2 2 3 2 2 3 3
None nothing 8 14 12 23 25 31 6 27 21 17 3 24
Donrsquot know 29 6 17 13 19 8 4 9 7 7 0 9
hart 6 The younger generation has more negative associations of retirement Which if any of the following words do you most associate with retirement
Net
herl
ands
Net
herl
ands
Ger
man
yG
erm
any
Swed
enSw
eden
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
d100 100 100 100 100 100 100 100 100 100 100 100
Kin
gdom
Kin
gdom
Freedom 35 32 36 39 19 26 11 20 35 40 37 33
Opportunity 7 27 25 18 4 8 9 10 17 16 9 16 Fr
ance
Fran
ceLeisure 58 48 36 41 23 24 43 32 50 50 55 6
Excitement 2 5 3 8 2 6 1 2 17 17 4 3 Sp
ain
Spai
nPoverty 11 26 23 11 26 14 37 44 7 5 6 20
Insecurity 34 24 18 16 20 18 35 56 10 9 18 44 P
olan
dP
olan
dLoneliness 4 10 17 16 12 7 11 8 5 9 20 12
Ill health 2 19 7 14 15 9 49 23 6 6 29 11 H
unga
ryH
unga
ryDependent on others 11 11 5 18 14 8 18 19 14 6 11 4
Tired 3 4 8 10 14 10 17 6 7 7 13 19 U
nite
dU
nite
dFar away 38 19 25 21 61 32 2 13 33
Stat
es33 14 22
Stat
es
Boredom 14 16 6 12 16 12 15 8 12 12 16 17 Ca
nada
Cana
daEnjoyment 21 16 17 23 14 29 5 3 37 37 35 15
None of the above 0 1 1 2 0 2 1 1 2 2 1 2
Donrsquot know 2 2 3 3 2 2 1 2 0 Ch
ina
6 Ch
ina
hart 7 Many young employees think they are not on course to achieve target retirement income Ja
pan
Japa
n Do you think you will achieve this income [your estimated income needed in retirement]
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
I donrsquot know if I am on course to 56 37 57 59 50 39 49 48 48 41 22 68 achieve my retirement income
No I am on course to achieve around one-quarter (25) of my 10 14 9 13 15 14 14 13 10 10 10 7 retirement income
No I am on course to achieve around 12 20 14 11 19 19 18 15 12 11 23 12 half of my retirement income
No I am on course to achieve around three-quarters (75) of my 8 14 7 4 8 15 9 8 6 11 20 5 retirement income
Yes I am on course to achieve my 15 15 13 14 8 13 11 17 25 27 25 8 retirement income
CQ
CQ
39 | The Young Pragmatic and Penniless Generation
Chart 8 Young people in most countries expect to retire before 65 Q At what age do you expect to retire from all paid employment
Net
herl
ands
Ger
man
y
Swed
en
Uni
ted
Kin
gdom
Fran
ce
Spai
n
Pol
and
Hun
gary
Uni
ted
Stat
es
Cana
da
Chin
a
Japa
n
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
40 or under 0 1 1 0 0 1 3 1 5 12
41-50 1 2 3 5 2 2 6 3 9 4 37 9
51-59 4 4 4 6 2 4 11 5 7 10 30 1
60 5 11 8 12 10 13 19 12 12 16 21 27
61-64 2 11 10 2 20 7 4 13 5 3 1 2
65 17 22 44 31 34 32 16 26 26 32 3 25
66-69 42 32 15 9 12 29 20 13 9 9 0 1
70 19 11 10 18 10 5 10 9 13 12 0 6
71+ 5 5 5 9 4 5 5 3 7 5 1 4
Never 2 1 1 2 2 2 6 4 1 0 0
Donrsquot know 2 3 2 5 3 2 8 9 5 5 1 13
Mean 67 65 65 65 64 65 63 64 63 64 53 59
Median 67 65 65 65 65 65 65 65 65 65 55 60
Chart 9 Younger employees feel they donrsquot have money to invest for retirement Q What is the single biggest obstacle to you saving for retirement right now
Net
herl
ands
Ger
man
y
Swed
en
Uni
ted
Kin
gdom
Fran
ce
Spai
n
Pol
and
Hun
gary
Uni
ted
Stat
es
Cana
da
Chin
a
Japa
n
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
The uncertain economic environment 19 8 13 9 13 19 11 14 12 9 29 27
Lack of money to invest 28 41 33 43 47 34 48 55 47 50 6 19
Fear of poor investment returns over the coming years 2 5 10 7 5 6 8 2 6 8 14 6
Complexity of investment products 4 4 4 3 5 3 5 2 12 5
I donrsquot know how to go about investing for the long-term 2 3 10 8 5 5 3 3 6 8 7 9
The fees charged by financial services companies 2 4 4 2 4 3 4 2 3 5 2 5
I canrsquot afford to take financial advice 3 3 6 8 2 4 3 5 3 2 3 2
I donrsquot trust the financial services industry 12 11 8 6 5 10 6 2 2 3 5 4
I donrsquot see the need to save for the long-term 6 1 2 2 3 3 3 1 2 1 4 3
Concerns about unstable currencies currency fluctuations 2 5 1 3 3 3 4 3 4 5 15 2
Other (PLEASE STATE) 3 3 1 1 3 2 4 6 2 2 1
Donrsquot know 17 12 11 7 8 6 3 6 8 6 3 17
The Young Pragmatic and Penniless Generation | 40
Chart 10 More money would incentivize young employees to save for retirement Q Which if any of the following would encourage you to save for retirement
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsMore generous tax breaks on long-term savings and pensions 20 44 30 32 27 23 42 42 33 43 40 32 products
Ger
man
yG
erm
any
Access to financial education so that I am more aware of what 24 6 14 21 16 22 21 12 23 24 43 25 I need to do for myself
Swed
enSw
eden
Access to professional financial advice so that I have personalized
Uni
ted
20 24 23 23 15 21 25 9 22 23 44 13 U
nite
drecommendations on what steps
Kin
gdom
Kin
gdom
I need to take
Simpler investment products that 12 33 19 28 20 Fr
ance
18 27 16 32 28 36 10 Fr
ance
I can understand with less jargon
Better and more frequent information about my retirement 16 28 20 27 27 23
Spai
n20 18 25 31 45 22
Spai
nsavings
Better legal protection in case I am 12 18 13 18 10 24 18 13 13 19 21 6 P
olan
dP
olan
dsold the wrong product
A pay rise 46 54 44 64 55 50 70 72 67 64 53 37
A better retirement plan pension H
unga
ryH
unga
ry27 32 25 33 29 26 42 35 39 44 33 32 match from my employer
Other 4 2 1 1 2 2 3 3 2 U
nite
d3 0
Uni
ted
Stat
esSt
ates
Donrsquot know 17 9 16 10 10 12 3 8 8 5 3 17
Not applicable - I already have 3 3 4 2 2 1 1 1 2 2 3 sufficient savings Ca
nada
Cana
da
Chin
aCh
ina
Chart 11 A majority of younger employees do not have a written plan for retirement Q Which of the following best describes your retirement planning strategy
Japa
n Ja
pan
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
I have a written plan 7 18 10 9 6 8 6 5 13 10 8 4
I have a plan but it is not written 24 47 37 25 23 31 29 31 37 44 55 24
down
I do not have a plan 61 32 51 61 62 55 62 58 45 42 34 61
Donrsquot know 7 3 3 5 8 6 3 6 4 4 3 12
41 | The Young Pragmatic and Penniless Generation
Chart 12 For young employees friends and family are the leading source of retirement savings information Q And which of these sources (of information) is most important to you
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
Bank adviser 6 11 19 5 25 5 7 4 3 17 10 2 N
ethe
rlan
dsN
ethe
rlan
dsProfessional financial adviser 12 22 10 12 10 19 19 22 21 25 19 10
Insurance agent spokesperson 3 10 2 3 1 3 6 2 3 0 3 2 G
erm
any
Ger
man
yInsurance company website 3 1 3 2 4 4 2 2 1 3 1
Personal finance websites online 8 5 7 8 5 4 10 8 12 6 10 8 retirement planning tools Sw
eden
Swed
enPersonal finance media 2 2 2 2 2 6 3 1 2 1 6 2
Government website 7 1 3 6 U
nite
d5 2 3 3 2 3 7 1
Uni
ted
Kin
gdom
Kin
gdom
Bank website 2 3 3 2 1 0 3 2 1 6 3 3
My employer 12 8 4 9 4 7 5 12 8 5 4 1 Fr
ance
Fran
ceAccountant 2 6 4 4 1 3 1 3 5 5 1 3
Lawyer 2 3 1 2 2 8 4 2 1 2 2 0 Sp
ain
Spai
nFriends and family 21 22 30 28 24 26 18 24 26 20 25 24
None of these P
olan
dP
olan
dNot applicable 21 7 16 18 19 13 17 15 14 9 5 41
Hun
gary
Hun
gary
Chart 13 Most young workers feel their employer should provide some kind of pension Q In the future what if anything should employers do to help people plan for retirement
Uni
ted
Uni
ted
Stat
esSt
ates
Cana
daCa
nada
Chin
aCh
ina
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 Ja
pan
Japa
n Employers should be required to 24 43 20 40 21 26 20 28 37 34 20 30 contribute to workersrsquo pensions
Employers should be required to make a pension available but not to 12 13 7 17 20 15 15 4 11 14 22 5 contribute into it
Employers should not be required to provide pensions but should 15 9 12 8 9 8 11 6 11 9 9 11 provide information on how to plan for retirement
Employers should provide a range of flexible benefits and 13 18 18 16 15 27 25 28 21 22 45 12 allow individuals to choose which benefits they actually want
Nothing ndash it should be left to individual employees to take care 2 2 5 1 4 3 3 5 6 5 1 9 of themselves
Nothing ndash it should be left to the government to take care of its 2 5 5 2 5 8 15 14 1 4 0 4 citizens
Donrsquot know 30 10 32 17 27 12 12 15 13 13 3 29
The Young Pragmatic and Penniless Generation | 42
Chart 14 Workplace pensions are relatively low down in young workersrsquo priorities when choosing a job Q How important to you would the following workplace benefits be if you were choosing your next job
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsBasic salary 86 93 88 91 88 92 90 94 90 93 96 94
Holiday entitlement 87 94 89 91 92 94 91 94 93 94 96 91 G
erm
any
Ger
man
yOvertime and bonus pay 86 93 87 88 89 90 89 94 90 91 97 90
Location of workplace 88 91 86 92 89 90 89 92 93 93 92 86 Sw
eden
Swed
enMedical health insurance 73 92 84 65 86 87 88 87 93 94 98 83
Opportunities for career progression 86 91 81 90 90 94 91 94 92 91 96 81 U
nite
dU
nite
dAccess to a workplace retirement 85 85 81 82
Kin
gdom
78 84 80 78 84 86 93 74 K
ingd
omplan with employer contributions
Access to good training provision 85 87 85 88 86 91 85 93 86 90 95 74 Fr
ance
Fran
ceFlexible working hours 79 87 58 86 81 89 81 87 91 91 92 57
Life insurance 72 75 79 69 80 82 Sp
ain
84 80 81 88 93 74 Sp
ain
(death in service benefits)
Phased retirement or other employer programs providing for 74 54 75 71 72 81 76 74 76 81 91 65
Pol
and
Pol
and
a transition into retirement
Ability to work past the normal 68 57 64 65 64 74 72 65 74 76 80 70 retirement age H
unga
ryH
unga
ry
Access to a workplace retirement 62 74 61 68 59 77 61 47 68 74 89 65 plan without employer contributions U
nite
dU
nite
dSt
ates
Stat
esEmployee share plans 50 72 54 65 59 73 61 51 64 73 91 55
Access to creche help with the 67 75 64 56 69 79 75 83 58 69 89 68 cost of childcare Ca
nada
Cana
da
Opportunities for foreign travel 53 54 60 55 50 71 58 66 57 61 79 37
Company car 51 46 45 47 49 63 51 49 36 49 69 Ch
ina
39 Ch
ina
Japa
n Ja
pan
Chart 15 Young workers think the state pension will need to be reformed Q With the cost of government pensions becoming a greater concern as people live longer which if any of the following do you think
the government should undertake
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
The government should reduce the overall cost of state pension 15 33 16 15 16 20 28 22 21 26 30 16 provision by reducing the value of individual pension plans
The government should increase overall funding available for the 12 21 30 22 14 34 19 26 21 18 29 10 state pension through raising taxes
43 | The Young Pragmatic and Penniless Generation
he government should take a alanced approach with some 27 26 12 30 28 23 24 16 34 31 38 41 eductions in individual payments nd some increases in tax
he government should not do nything State pension provision 7 2 12 5 3 4 3 3 5 4 0 5 ill remain perfectly affordable in he future
onrsquot know 38 19 29 29 39 20 26 34 19 21 4 28
Net
herl
ands
art 16 Products which protect against investment risk are the most important to young workers ( interested) Thinking about the types of financial products you could purchase to help provide you with security in retirement on a scale of 1 to 5
how interested are you in the following options G
erm
any
Swed
en
Uni
ted
Kin
gdom
ase 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 Fr
ance
100 100 100 100 100 100 100 100 100 100 100 100
product providing a guaranteed etirement income stream or 75 81 73 76 74 83 78 76 87 85 94 69
Spai
nifetime income in retirement
product which protects my 74 79 73 76 72 82 77 74 84 86 94 65 etirement income against inflation P
olan
d
product which guarantees that I 72 82 73 78 75 81 76 73 86 86 90 67 onrsquot lose my initial investment H
unga
ry product which helps meet the ost of long-term care if I become 74 79 74 77 70 79 76 71 86 85 84 66
Uni
ted
nable to look after myself St
ates
product which protects my capital 71 81 71 76 68 76 77 73 84 83 93 65 rom poor investment returns Ca
nada
product which generates a etirement income and allows 69 78 71 75 68 81 77 72 84 86 94 70 e to take a lump sum from the
Chin
anvestment should I need to
product where the annual 66 78 68 75 72 79 77 70 85 86 87 64 anagement charges are kept low Ja
pan
product which enables me to eep some control over how my 71 73 70 75 72 80 75 69 88 85 91 63 avings are invested during my etirement
product which manages the sset allocation so that I am never 68 70 67 73 66 76 71 67 80 83 95 60 xposed to a level of risk Irsquom not omfortable with
product which continues to rovide a retirement income to my 74 78 71 75 73 81 79 73 86 82 94 60 pouse in the event that I die first
product which protects my family gainst having to pay estate taxes 73 76 71 74 75 81 75 69 82 82 89 56 hen I die
product which locks in investment 72 71 63 73 64 71 59 56 81 84 89 61 eturns during the good years
Tbra
Tawt
D
ChQ
B
Arl
Ar
Ad
Acu
Af
Armi
Am
Aksr
Aaec
Aps
Aaw
Ar
The Young Pragmatic and Penniless Generation | 44
Plan de empleo mixto 2 (combinacioacuten de las dos anteriores)
Other 1 6 4 0 1 2 2 3 2 2 3 3
None nothing 8 14 12 23 25 31 6 27 21 17 3 24
Donrsquot know 29 6 17 13 19 8 4 9 7 7 0 9
hart 6 The younger generation has more negative associations of retirement Which if any of the following words do you most associate with retirement
Net
herl
ands
Net
herl
ands
Ger
man
yG
erm
any
Swed
enSw
eden
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 U
nite
dU
nite
d100 100 100 100 100 100 100 100 100 100 100 100
Kin
gdom
Kin
gdom
Freedom 35 32 36 39 19 26 11 20 35 40 37 33
Opportunity 7 27 25 18 4 8 9 10 17 16 9 16 Fr
ance
Fran
ceLeisure 58 48 36 41 23 24 43 32 50 50 55 6
Excitement 2 5 3 8 2 6 1 2 17 17 4 3 Sp
ain
Spai
nPoverty 11 26 23 11 26 14 37 44 7 5 6 20
Insecurity 34 24 18 16 20 18 35 56 10 9 18 44 P
olan
dP
olan
dLoneliness 4 10 17 16 12 7 11 8 5 9 20 12
Ill health 2 19 7 14 15 9 49 23 6 6 29 11 H
unga
ryH
unga
ryDependent on others 11 11 5 18 14 8 18 19 14 6 11 4
Tired 3 4 8 10 14 10 17 6 7 7 13 19 U
nite
dU
nite
dFar away 38 19 25 21 61 32 2 13 33
Stat
es33 14 22
Stat
es
Boredom 14 16 6 12 16 12 15 8 12 12 16 17 Ca
nada
Cana
daEnjoyment 21 16 17 23 14 29 5 3 37 37 35 15
None of the above 0 1 1 2 0 2 1 1 2 2 1 2
Donrsquot know 2 2 3 3 2 2 1 2 0 Ch
ina
6 Ch
ina
hart 7 Many young employees think they are not on course to achieve target retirement income Ja
pan
Japa
n Do you think you will achieve this income [your estimated income needed in retirement]
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
I donrsquot know if I am on course to 56 37 57 59 50 39 49 48 48 41 22 68 achieve my retirement income
No I am on course to achieve around one-quarter (25) of my 10 14 9 13 15 14 14 13 10 10 10 7 retirement income
No I am on course to achieve around 12 20 14 11 19 19 18 15 12 11 23 12 half of my retirement income
No I am on course to achieve around three-quarters (75) of my 8 14 7 4 8 15 9 8 6 11 20 5 retirement income
Yes I am on course to achieve my 15 15 13 14 8 13 11 17 25 27 25 8 retirement income
CQ
CQ
39 | The Young Pragmatic and Penniless Generation
Chart 8 Young people in most countries expect to retire before 65 Q At what age do you expect to retire from all paid employment
Net
herl
ands
Ger
man
y
Swed
en
Uni
ted
Kin
gdom
Fran
ce
Spai
n
Pol
and
Hun
gary
Uni
ted
Stat
es
Cana
da
Chin
a
Japa
n
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
40 or under 0 1 1 0 0 1 3 1 5 12
41-50 1 2 3 5 2 2 6 3 9 4 37 9
51-59 4 4 4 6 2 4 11 5 7 10 30 1
60 5 11 8 12 10 13 19 12 12 16 21 27
61-64 2 11 10 2 20 7 4 13 5 3 1 2
65 17 22 44 31 34 32 16 26 26 32 3 25
66-69 42 32 15 9 12 29 20 13 9 9 0 1
70 19 11 10 18 10 5 10 9 13 12 0 6
71+ 5 5 5 9 4 5 5 3 7 5 1 4
Never 2 1 1 2 2 2 6 4 1 0 0
Donrsquot know 2 3 2 5 3 2 8 9 5 5 1 13
Mean 67 65 65 65 64 65 63 64 63 64 53 59
Median 67 65 65 65 65 65 65 65 65 65 55 60
Chart 9 Younger employees feel they donrsquot have money to invest for retirement Q What is the single biggest obstacle to you saving for retirement right now
Net
herl
ands
Ger
man
y
Swed
en
Uni
ted
Kin
gdom
Fran
ce
Spai
n
Pol
and
Hun
gary
Uni
ted
Stat
es
Cana
da
Chin
a
Japa
n
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
The uncertain economic environment 19 8 13 9 13 19 11 14 12 9 29 27
Lack of money to invest 28 41 33 43 47 34 48 55 47 50 6 19
Fear of poor investment returns over the coming years 2 5 10 7 5 6 8 2 6 8 14 6
Complexity of investment products 4 4 4 3 5 3 5 2 12 5
I donrsquot know how to go about investing for the long-term 2 3 10 8 5 5 3 3 6 8 7 9
The fees charged by financial services companies 2 4 4 2 4 3 4 2 3 5 2 5
I canrsquot afford to take financial advice 3 3 6 8 2 4 3 5 3 2 3 2
I donrsquot trust the financial services industry 12 11 8 6 5 10 6 2 2 3 5 4
I donrsquot see the need to save for the long-term 6 1 2 2 3 3 3 1 2 1 4 3
Concerns about unstable currencies currency fluctuations 2 5 1 3 3 3 4 3 4 5 15 2
Other (PLEASE STATE) 3 3 1 1 3 2 4 6 2 2 1
Donrsquot know 17 12 11 7 8 6 3 6 8 6 3 17
The Young Pragmatic and Penniless Generation | 40
Chart 10 More money would incentivize young employees to save for retirement Q Which if any of the following would encourage you to save for retirement
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsMore generous tax breaks on long-term savings and pensions 20 44 30 32 27 23 42 42 33 43 40 32 products
Ger
man
yG
erm
any
Access to financial education so that I am more aware of what 24 6 14 21 16 22 21 12 23 24 43 25 I need to do for myself
Swed
enSw
eden
Access to professional financial advice so that I have personalized
Uni
ted
20 24 23 23 15 21 25 9 22 23 44 13 U
nite
drecommendations on what steps
Kin
gdom
Kin
gdom
I need to take
Simpler investment products that 12 33 19 28 20 Fr
ance
18 27 16 32 28 36 10 Fr
ance
I can understand with less jargon
Better and more frequent information about my retirement 16 28 20 27 27 23
Spai
n20 18 25 31 45 22
Spai
nsavings
Better legal protection in case I am 12 18 13 18 10 24 18 13 13 19 21 6 P
olan
dP
olan
dsold the wrong product
A pay rise 46 54 44 64 55 50 70 72 67 64 53 37
A better retirement plan pension H
unga
ryH
unga
ry27 32 25 33 29 26 42 35 39 44 33 32 match from my employer
Other 4 2 1 1 2 2 3 3 2 U
nite
d3 0
Uni
ted
Stat
esSt
ates
Donrsquot know 17 9 16 10 10 12 3 8 8 5 3 17
Not applicable - I already have 3 3 4 2 2 1 1 1 2 2 3 sufficient savings Ca
nada
Cana
da
Chin
aCh
ina
Chart 11 A majority of younger employees do not have a written plan for retirement Q Which of the following best describes your retirement planning strategy
Japa
n Ja
pan
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
I have a written plan 7 18 10 9 6 8 6 5 13 10 8 4
I have a plan but it is not written 24 47 37 25 23 31 29 31 37 44 55 24
down
I do not have a plan 61 32 51 61 62 55 62 58 45 42 34 61
Donrsquot know 7 3 3 5 8 6 3 6 4 4 3 12
41 | The Young Pragmatic and Penniless Generation
Chart 12 For young employees friends and family are the leading source of retirement savings information Q And which of these sources (of information) is most important to you
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
Bank adviser 6 11 19 5 25 5 7 4 3 17 10 2 N
ethe
rlan
dsN
ethe
rlan
dsProfessional financial adviser 12 22 10 12 10 19 19 22 21 25 19 10
Insurance agent spokesperson 3 10 2 3 1 3 6 2 3 0 3 2 G
erm
any
Ger
man
yInsurance company website 3 1 3 2 4 4 2 2 1 3 1
Personal finance websites online 8 5 7 8 5 4 10 8 12 6 10 8 retirement planning tools Sw
eden
Swed
enPersonal finance media 2 2 2 2 2 6 3 1 2 1 6 2
Government website 7 1 3 6 U
nite
d5 2 3 3 2 3 7 1
Uni
ted
Kin
gdom
Kin
gdom
Bank website 2 3 3 2 1 0 3 2 1 6 3 3
My employer 12 8 4 9 4 7 5 12 8 5 4 1 Fr
ance
Fran
ceAccountant 2 6 4 4 1 3 1 3 5 5 1 3
Lawyer 2 3 1 2 2 8 4 2 1 2 2 0 Sp
ain
Spai
nFriends and family 21 22 30 28 24 26 18 24 26 20 25 24
None of these P
olan
dP
olan
dNot applicable 21 7 16 18 19 13 17 15 14 9 5 41
Hun
gary
Hun
gary
Chart 13 Most young workers feel their employer should provide some kind of pension Q In the future what if anything should employers do to help people plan for retirement
Uni
ted
Uni
ted
Stat
esSt
ates
Cana
daCa
nada
Chin
aCh
ina
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 Ja
pan
Japa
n Employers should be required to 24 43 20 40 21 26 20 28 37 34 20 30 contribute to workersrsquo pensions
Employers should be required to make a pension available but not to 12 13 7 17 20 15 15 4 11 14 22 5 contribute into it
Employers should not be required to provide pensions but should 15 9 12 8 9 8 11 6 11 9 9 11 provide information on how to plan for retirement
Employers should provide a range of flexible benefits and 13 18 18 16 15 27 25 28 21 22 45 12 allow individuals to choose which benefits they actually want
Nothing ndash it should be left to individual employees to take care 2 2 5 1 4 3 3 5 6 5 1 9 of themselves
Nothing ndash it should be left to the government to take care of its 2 5 5 2 5 8 15 14 1 4 0 4 citizens
Donrsquot know 30 10 32 17 27 12 12 15 13 13 3 29
The Young Pragmatic and Penniless Generation | 42
Chart 14 Workplace pensions are relatively low down in young workersrsquo priorities when choosing a job Q How important to you would the following workplace benefits be if you were choosing your next job
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsBasic salary 86 93 88 91 88 92 90 94 90 93 96 94
Holiday entitlement 87 94 89 91 92 94 91 94 93 94 96 91 G
erm
any
Ger
man
yOvertime and bonus pay 86 93 87 88 89 90 89 94 90 91 97 90
Location of workplace 88 91 86 92 89 90 89 92 93 93 92 86 Sw
eden
Swed
enMedical health insurance 73 92 84 65 86 87 88 87 93 94 98 83
Opportunities for career progression 86 91 81 90 90 94 91 94 92 91 96 81 U
nite
dU
nite
dAccess to a workplace retirement 85 85 81 82
Kin
gdom
78 84 80 78 84 86 93 74 K
ingd
omplan with employer contributions
Access to good training provision 85 87 85 88 86 91 85 93 86 90 95 74 Fr
ance
Fran
ceFlexible working hours 79 87 58 86 81 89 81 87 91 91 92 57
Life insurance 72 75 79 69 80 82 Sp
ain
84 80 81 88 93 74 Sp
ain
(death in service benefits)
Phased retirement or other employer programs providing for 74 54 75 71 72 81 76 74 76 81 91 65
Pol
and
Pol
and
a transition into retirement
Ability to work past the normal 68 57 64 65 64 74 72 65 74 76 80 70 retirement age H
unga
ryH
unga
ry
Access to a workplace retirement 62 74 61 68 59 77 61 47 68 74 89 65 plan without employer contributions U
nite
dU
nite
dSt
ates
Stat
esEmployee share plans 50 72 54 65 59 73 61 51 64 73 91 55
Access to creche help with the 67 75 64 56 69 79 75 83 58 69 89 68 cost of childcare Ca
nada
Cana
da
Opportunities for foreign travel 53 54 60 55 50 71 58 66 57 61 79 37
Company car 51 46 45 47 49 63 51 49 36 49 69 Ch
ina
39 Ch
ina
Japa
n Ja
pan
Chart 15 Young workers think the state pension will need to be reformed Q With the cost of government pensions becoming a greater concern as people live longer which if any of the following do you think
the government should undertake
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
The government should reduce the overall cost of state pension 15 33 16 15 16 20 28 22 21 26 30 16 provision by reducing the value of individual pension plans
The government should increase overall funding available for the 12 21 30 22 14 34 19 26 21 18 29 10 state pension through raising taxes
43 | The Young Pragmatic and Penniless Generation
he government should take a alanced approach with some 27 26 12 30 28 23 24 16 34 31 38 41 eductions in individual payments nd some increases in tax
he government should not do nything State pension provision 7 2 12 5 3 4 3 3 5 4 0 5 ill remain perfectly affordable in he future
onrsquot know 38 19 29 29 39 20 26 34 19 21 4 28
Net
herl
ands
art 16 Products which protect against investment risk are the most important to young workers ( interested) Thinking about the types of financial products you could purchase to help provide you with security in retirement on a scale of 1 to 5
how interested are you in the following options G
erm
any
Swed
en
Uni
ted
Kin
gdom
ase 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 Fr
ance
100 100 100 100 100 100 100 100 100 100 100 100
product providing a guaranteed etirement income stream or 75 81 73 76 74 83 78 76 87 85 94 69
Spai
nifetime income in retirement
product which protects my 74 79 73 76 72 82 77 74 84 86 94 65 etirement income against inflation P
olan
d
product which guarantees that I 72 82 73 78 75 81 76 73 86 86 90 67 onrsquot lose my initial investment H
unga
ry product which helps meet the ost of long-term care if I become 74 79 74 77 70 79 76 71 86 85 84 66
Uni
ted
nable to look after myself St
ates
product which protects my capital 71 81 71 76 68 76 77 73 84 83 93 65 rom poor investment returns Ca
nada
product which generates a etirement income and allows 69 78 71 75 68 81 77 72 84 86 94 70 e to take a lump sum from the
Chin
anvestment should I need to
product where the annual 66 78 68 75 72 79 77 70 85 86 87 64 anagement charges are kept low Ja
pan
product which enables me to eep some control over how my 71 73 70 75 72 80 75 69 88 85 91 63 avings are invested during my etirement
product which manages the sset allocation so that I am never 68 70 67 73 66 76 71 67 80 83 95 60 xposed to a level of risk Irsquom not omfortable with
product which continues to rovide a retirement income to my 74 78 71 75 73 81 79 73 86 82 94 60 pouse in the event that I die first
product which protects my family gainst having to pay estate taxes 73 76 71 74 75 81 75 69 82 82 89 56 hen I die
product which locks in investment 72 71 63 73 64 71 59 56 81 84 89 61 eturns during the good years
Tbra
Tawt
D
ChQ
B
Arl
Ar
Ad
Acu
Af
Armi
Am
Aksr
Aaec
Aps
Aaw
Ar
The Young Pragmatic and Penniless Generation | 44
Chart 8 Young people in most countries expect to retire before 65 Q At what age do you expect to retire from all paid employment
Net
herl
ands
Ger
man
y
Swed
en
Uni
ted
Kin
gdom
Fran
ce
Spai
n
Pol
and
Hun
gary
Uni
ted
Stat
es
Cana
da
Chin
a
Japa
n
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
40 or under 0 1 1 0 0 1 3 1 5 12
41-50 1 2 3 5 2 2 6 3 9 4 37 9
51-59 4 4 4 6 2 4 11 5 7 10 30 1
60 5 11 8 12 10 13 19 12 12 16 21 27
61-64 2 11 10 2 20 7 4 13 5 3 1 2
65 17 22 44 31 34 32 16 26 26 32 3 25
66-69 42 32 15 9 12 29 20 13 9 9 0 1
70 19 11 10 18 10 5 10 9 13 12 0 6
71+ 5 5 5 9 4 5 5 3 7 5 1 4
Never 2 1 1 2 2 2 6 4 1 0 0
Donrsquot know 2 3 2 5 3 2 8 9 5 5 1 13
Mean 67 65 65 65 64 65 63 64 63 64 53 59
Median 67 65 65 65 65 65 65 65 65 65 55 60
Chart 9 Younger employees feel they donrsquot have money to invest for retirement Q What is the single biggest obstacle to you saving for retirement right now
Net
herl
ands
Ger
man
y
Swed
en
Uni
ted
Kin
gdom
Fran
ce
Spai
n
Pol
and
Hun
gary
Uni
ted
Stat
es
Cana
da
Chin
a
Japa
n
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
The uncertain economic environment 19 8 13 9 13 19 11 14 12 9 29 27
Lack of money to invest 28 41 33 43 47 34 48 55 47 50 6 19
Fear of poor investment returns over the coming years 2 5 10 7 5 6 8 2 6 8 14 6
Complexity of investment products 4 4 4 3 5 3 5 2 12 5
I donrsquot know how to go about investing for the long-term 2 3 10 8 5 5 3 3 6 8 7 9
The fees charged by financial services companies 2 4 4 2 4 3 4 2 3 5 2 5
I canrsquot afford to take financial advice 3 3 6 8 2 4 3 5 3 2 3 2
I donrsquot trust the financial services industry 12 11 8 6 5 10 6 2 2 3 5 4
I donrsquot see the need to save for the long-term 6 1 2 2 3 3 3 1 2 1 4 3
Concerns about unstable currencies currency fluctuations 2 5 1 3 3 3 4 3 4 5 15 2
Other (PLEASE STATE) 3 3 1 1 3 2 4 6 2 2 1
Donrsquot know 17 12 11 7 8 6 3 6 8 6 3 17
The Young Pragmatic and Penniless Generation | 40
Chart 10 More money would incentivize young employees to save for retirement Q Which if any of the following would encourage you to save for retirement
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsMore generous tax breaks on long-term savings and pensions 20 44 30 32 27 23 42 42 33 43 40 32 products
Ger
man
yG
erm
any
Access to financial education so that I am more aware of what 24 6 14 21 16 22 21 12 23 24 43 25 I need to do for myself
Swed
enSw
eden
Access to professional financial advice so that I have personalized
Uni
ted
20 24 23 23 15 21 25 9 22 23 44 13 U
nite
drecommendations on what steps
Kin
gdom
Kin
gdom
I need to take
Simpler investment products that 12 33 19 28 20 Fr
ance
18 27 16 32 28 36 10 Fr
ance
I can understand with less jargon
Better and more frequent information about my retirement 16 28 20 27 27 23
Spai
n20 18 25 31 45 22
Spai
nsavings
Better legal protection in case I am 12 18 13 18 10 24 18 13 13 19 21 6 P
olan
dP
olan
dsold the wrong product
A pay rise 46 54 44 64 55 50 70 72 67 64 53 37
A better retirement plan pension H
unga
ryH
unga
ry27 32 25 33 29 26 42 35 39 44 33 32 match from my employer
Other 4 2 1 1 2 2 3 3 2 U
nite
d3 0
Uni
ted
Stat
esSt
ates
Donrsquot know 17 9 16 10 10 12 3 8 8 5 3 17
Not applicable - I already have 3 3 4 2 2 1 1 1 2 2 3 sufficient savings Ca
nada
Cana
da
Chin
aCh
ina
Chart 11 A majority of younger employees do not have a written plan for retirement Q Which of the following best describes your retirement planning strategy
Japa
n Ja
pan
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
I have a written plan 7 18 10 9 6 8 6 5 13 10 8 4
I have a plan but it is not written 24 47 37 25 23 31 29 31 37 44 55 24
down
I do not have a plan 61 32 51 61 62 55 62 58 45 42 34 61
Donrsquot know 7 3 3 5 8 6 3 6 4 4 3 12
41 | The Young Pragmatic and Penniless Generation
Chart 12 For young employees friends and family are the leading source of retirement savings information Q And which of these sources (of information) is most important to you
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
Bank adviser 6 11 19 5 25 5 7 4 3 17 10 2 N
ethe
rlan
dsN
ethe
rlan
dsProfessional financial adviser 12 22 10 12 10 19 19 22 21 25 19 10
Insurance agent spokesperson 3 10 2 3 1 3 6 2 3 0 3 2 G
erm
any
Ger
man
yInsurance company website 3 1 3 2 4 4 2 2 1 3 1
Personal finance websites online 8 5 7 8 5 4 10 8 12 6 10 8 retirement planning tools Sw
eden
Swed
enPersonal finance media 2 2 2 2 2 6 3 1 2 1 6 2
Government website 7 1 3 6 U
nite
d5 2 3 3 2 3 7 1
Uni
ted
Kin
gdom
Kin
gdom
Bank website 2 3 3 2 1 0 3 2 1 6 3 3
My employer 12 8 4 9 4 7 5 12 8 5 4 1 Fr
ance
Fran
ceAccountant 2 6 4 4 1 3 1 3 5 5 1 3
Lawyer 2 3 1 2 2 8 4 2 1 2 2 0 Sp
ain
Spai
nFriends and family 21 22 30 28 24 26 18 24 26 20 25 24
None of these P
olan
dP
olan
dNot applicable 21 7 16 18 19 13 17 15 14 9 5 41
Hun
gary
Hun
gary
Chart 13 Most young workers feel their employer should provide some kind of pension Q In the future what if anything should employers do to help people plan for retirement
Uni
ted
Uni
ted
Stat
esSt
ates
Cana
daCa
nada
Chin
aCh
ina
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 Ja
pan
Japa
n Employers should be required to 24 43 20 40 21 26 20 28 37 34 20 30 contribute to workersrsquo pensions
Employers should be required to make a pension available but not to 12 13 7 17 20 15 15 4 11 14 22 5 contribute into it
Employers should not be required to provide pensions but should 15 9 12 8 9 8 11 6 11 9 9 11 provide information on how to plan for retirement
Employers should provide a range of flexible benefits and 13 18 18 16 15 27 25 28 21 22 45 12 allow individuals to choose which benefits they actually want
Nothing ndash it should be left to individual employees to take care 2 2 5 1 4 3 3 5 6 5 1 9 of themselves
Nothing ndash it should be left to the government to take care of its 2 5 5 2 5 8 15 14 1 4 0 4 citizens
Donrsquot know 30 10 32 17 27 12 12 15 13 13 3 29
The Young Pragmatic and Penniless Generation | 42
Chart 14 Workplace pensions are relatively low down in young workersrsquo priorities when choosing a job Q How important to you would the following workplace benefits be if you were choosing your next job
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsBasic salary 86 93 88 91 88 92 90 94 90 93 96 94
Holiday entitlement 87 94 89 91 92 94 91 94 93 94 96 91 G
erm
any
Ger
man
yOvertime and bonus pay 86 93 87 88 89 90 89 94 90 91 97 90
Location of workplace 88 91 86 92 89 90 89 92 93 93 92 86 Sw
eden
Swed
enMedical health insurance 73 92 84 65 86 87 88 87 93 94 98 83
Opportunities for career progression 86 91 81 90 90 94 91 94 92 91 96 81 U
nite
dU
nite
dAccess to a workplace retirement 85 85 81 82
Kin
gdom
78 84 80 78 84 86 93 74 K
ingd
omplan with employer contributions
Access to good training provision 85 87 85 88 86 91 85 93 86 90 95 74 Fr
ance
Fran
ceFlexible working hours 79 87 58 86 81 89 81 87 91 91 92 57
Life insurance 72 75 79 69 80 82 Sp
ain
84 80 81 88 93 74 Sp
ain
(death in service benefits)
Phased retirement or other employer programs providing for 74 54 75 71 72 81 76 74 76 81 91 65
Pol
and
Pol
and
a transition into retirement
Ability to work past the normal 68 57 64 65 64 74 72 65 74 76 80 70 retirement age H
unga
ryH
unga
ry
Access to a workplace retirement 62 74 61 68 59 77 61 47 68 74 89 65 plan without employer contributions U
nite
dU
nite
dSt
ates
Stat
esEmployee share plans 50 72 54 65 59 73 61 51 64 73 91 55
Access to creche help with the 67 75 64 56 69 79 75 83 58 69 89 68 cost of childcare Ca
nada
Cana
da
Opportunities for foreign travel 53 54 60 55 50 71 58 66 57 61 79 37
Company car 51 46 45 47 49 63 51 49 36 49 69 Ch
ina
39 Ch
ina
Japa
n Ja
pan
Chart 15 Young workers think the state pension will need to be reformed Q With the cost of government pensions becoming a greater concern as people live longer which if any of the following do you think
the government should undertake
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
The government should reduce the overall cost of state pension 15 33 16 15 16 20 28 22 21 26 30 16 provision by reducing the value of individual pension plans
The government should increase overall funding available for the 12 21 30 22 14 34 19 26 21 18 29 10 state pension through raising taxes
43 | The Young Pragmatic and Penniless Generation
he government should take a alanced approach with some 27 26 12 30 28 23 24 16 34 31 38 41 eductions in individual payments nd some increases in tax
he government should not do nything State pension provision 7 2 12 5 3 4 3 3 5 4 0 5 ill remain perfectly affordable in he future
onrsquot know 38 19 29 29 39 20 26 34 19 21 4 28
Net
herl
ands
art 16 Products which protect against investment risk are the most important to young workers ( interested) Thinking about the types of financial products you could purchase to help provide you with security in retirement on a scale of 1 to 5
how interested are you in the following options G
erm
any
Swed
en
Uni
ted
Kin
gdom
ase 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 Fr
ance
100 100 100 100 100 100 100 100 100 100 100 100
product providing a guaranteed etirement income stream or 75 81 73 76 74 83 78 76 87 85 94 69
Spai
nifetime income in retirement
product which protects my 74 79 73 76 72 82 77 74 84 86 94 65 etirement income against inflation P
olan
d
product which guarantees that I 72 82 73 78 75 81 76 73 86 86 90 67 onrsquot lose my initial investment H
unga
ry product which helps meet the ost of long-term care if I become 74 79 74 77 70 79 76 71 86 85 84 66
Uni
ted
nable to look after myself St
ates
product which protects my capital 71 81 71 76 68 76 77 73 84 83 93 65 rom poor investment returns Ca
nada
product which generates a etirement income and allows 69 78 71 75 68 81 77 72 84 86 94 70 e to take a lump sum from the
Chin
anvestment should I need to
product where the annual 66 78 68 75 72 79 77 70 85 86 87 64 anagement charges are kept low Ja
pan
product which enables me to eep some control over how my 71 73 70 75 72 80 75 69 88 85 91 63 avings are invested during my etirement
product which manages the sset allocation so that I am never 68 70 67 73 66 76 71 67 80 83 95 60 xposed to a level of risk Irsquom not omfortable with
product which continues to rovide a retirement income to my 74 78 71 75 73 81 79 73 86 82 94 60 pouse in the event that I die first
product which protects my family gainst having to pay estate taxes 73 76 71 74 75 81 75 69 82 82 89 56 hen I die
product which locks in investment 72 71 63 73 64 71 59 56 81 84 89 61 eturns during the good years
Tbra
Tawt
D
ChQ
B
Arl
Ar
Ad
Acu
Af
Armi
Am
Aksr
Aaec
Aps
Aaw
Ar
The Young Pragmatic and Penniless Generation | 44
Chart 10 More money would incentivize young employees to save for retirement Q Which if any of the following would encourage you to save for retirement
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsMore generous tax breaks on long-term savings and pensions 20 44 30 32 27 23 42 42 33 43 40 32 products
Ger
man
yG
erm
any
Access to financial education so that I am more aware of what 24 6 14 21 16 22 21 12 23 24 43 25 I need to do for myself
Swed
enSw
eden
Access to professional financial advice so that I have personalized
Uni
ted
20 24 23 23 15 21 25 9 22 23 44 13 U
nite
drecommendations on what steps
Kin
gdom
Kin
gdom
I need to take
Simpler investment products that 12 33 19 28 20 Fr
ance
18 27 16 32 28 36 10 Fr
ance
I can understand with less jargon
Better and more frequent information about my retirement 16 28 20 27 27 23
Spai
n20 18 25 31 45 22
Spai
nsavings
Better legal protection in case I am 12 18 13 18 10 24 18 13 13 19 21 6 P
olan
dP
olan
dsold the wrong product
A pay rise 46 54 44 64 55 50 70 72 67 64 53 37
A better retirement plan pension H
unga
ryH
unga
ry27 32 25 33 29 26 42 35 39 44 33 32 match from my employer
Other 4 2 1 1 2 2 3 3 2 U
nite
d3 0
Uni
ted
Stat
esSt
ates
Donrsquot know 17 9 16 10 10 12 3 8 8 5 3 17
Not applicable - I already have 3 3 4 2 2 1 1 1 2 2 3 sufficient savings Ca
nada
Cana
da
Chin
aCh
ina
Chart 11 A majority of younger employees do not have a written plan for retirement Q Which of the following best describes your retirement planning strategy
Japa
n Ja
pan
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
I have a written plan 7 18 10 9 6 8 6 5 13 10 8 4
I have a plan but it is not written 24 47 37 25 23 31 29 31 37 44 55 24
down
I do not have a plan 61 32 51 61 62 55 62 58 45 42 34 61
Donrsquot know 7 3 3 5 8 6 3 6 4 4 3 12
41 | The Young Pragmatic and Penniless Generation
Chart 12 For young employees friends and family are the leading source of retirement savings information Q And which of these sources (of information) is most important to you
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
Bank adviser 6 11 19 5 25 5 7 4 3 17 10 2 N
ethe
rlan
dsN
ethe
rlan
dsProfessional financial adviser 12 22 10 12 10 19 19 22 21 25 19 10
Insurance agent spokesperson 3 10 2 3 1 3 6 2 3 0 3 2 G
erm
any
Ger
man
yInsurance company website 3 1 3 2 4 4 2 2 1 3 1
Personal finance websites online 8 5 7 8 5 4 10 8 12 6 10 8 retirement planning tools Sw
eden
Swed
enPersonal finance media 2 2 2 2 2 6 3 1 2 1 6 2
Government website 7 1 3 6 U
nite
d5 2 3 3 2 3 7 1
Uni
ted
Kin
gdom
Kin
gdom
Bank website 2 3 3 2 1 0 3 2 1 6 3 3
My employer 12 8 4 9 4 7 5 12 8 5 4 1 Fr
ance
Fran
ceAccountant 2 6 4 4 1 3 1 3 5 5 1 3
Lawyer 2 3 1 2 2 8 4 2 1 2 2 0 Sp
ain
Spai
nFriends and family 21 22 30 28 24 26 18 24 26 20 25 24
None of these P
olan
dP
olan
dNot applicable 21 7 16 18 19 13 17 15 14 9 5 41
Hun
gary
Hun
gary
Chart 13 Most young workers feel their employer should provide some kind of pension Q In the future what if anything should employers do to help people plan for retirement
Uni
ted
Uni
ted
Stat
esSt
ates
Cana
daCa
nada
Chin
aCh
ina
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 Ja
pan
Japa
n Employers should be required to 24 43 20 40 21 26 20 28 37 34 20 30 contribute to workersrsquo pensions
Employers should be required to make a pension available but not to 12 13 7 17 20 15 15 4 11 14 22 5 contribute into it
Employers should not be required to provide pensions but should 15 9 12 8 9 8 11 6 11 9 9 11 provide information on how to plan for retirement
Employers should provide a range of flexible benefits and 13 18 18 16 15 27 25 28 21 22 45 12 allow individuals to choose which benefits they actually want
Nothing ndash it should be left to individual employees to take care 2 2 5 1 4 3 3 5 6 5 1 9 of themselves
Nothing ndash it should be left to the government to take care of its 2 5 5 2 5 8 15 14 1 4 0 4 citizens
Donrsquot know 30 10 32 17 27 12 12 15 13 13 3 29
The Young Pragmatic and Penniless Generation | 42
Chart 14 Workplace pensions are relatively low down in young workersrsquo priorities when choosing a job Q How important to you would the following workplace benefits be if you were choosing your next job
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsBasic salary 86 93 88 91 88 92 90 94 90 93 96 94
Holiday entitlement 87 94 89 91 92 94 91 94 93 94 96 91 G
erm
any
Ger
man
yOvertime and bonus pay 86 93 87 88 89 90 89 94 90 91 97 90
Location of workplace 88 91 86 92 89 90 89 92 93 93 92 86 Sw
eden
Swed
enMedical health insurance 73 92 84 65 86 87 88 87 93 94 98 83
Opportunities for career progression 86 91 81 90 90 94 91 94 92 91 96 81 U
nite
dU
nite
dAccess to a workplace retirement 85 85 81 82
Kin
gdom
78 84 80 78 84 86 93 74 K
ingd
omplan with employer contributions
Access to good training provision 85 87 85 88 86 91 85 93 86 90 95 74 Fr
ance
Fran
ceFlexible working hours 79 87 58 86 81 89 81 87 91 91 92 57
Life insurance 72 75 79 69 80 82 Sp
ain
84 80 81 88 93 74 Sp
ain
(death in service benefits)
Phased retirement or other employer programs providing for 74 54 75 71 72 81 76 74 76 81 91 65
Pol
and
Pol
and
a transition into retirement
Ability to work past the normal 68 57 64 65 64 74 72 65 74 76 80 70 retirement age H
unga
ryH
unga
ry
Access to a workplace retirement 62 74 61 68 59 77 61 47 68 74 89 65 plan without employer contributions U
nite
dU
nite
dSt
ates
Stat
esEmployee share plans 50 72 54 65 59 73 61 51 64 73 91 55
Access to creche help with the 67 75 64 56 69 79 75 83 58 69 89 68 cost of childcare Ca
nada
Cana
da
Opportunities for foreign travel 53 54 60 55 50 71 58 66 57 61 79 37
Company car 51 46 45 47 49 63 51 49 36 49 69 Ch
ina
39 Ch
ina
Japa
n Ja
pan
Chart 15 Young workers think the state pension will need to be reformed Q With the cost of government pensions becoming a greater concern as people live longer which if any of the following do you think
the government should undertake
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
The government should reduce the overall cost of state pension 15 33 16 15 16 20 28 22 21 26 30 16 provision by reducing the value of individual pension plans
The government should increase overall funding available for the 12 21 30 22 14 34 19 26 21 18 29 10 state pension through raising taxes
43 | The Young Pragmatic and Penniless Generation
he government should take a alanced approach with some 27 26 12 30 28 23 24 16 34 31 38 41 eductions in individual payments nd some increases in tax
he government should not do nything State pension provision 7 2 12 5 3 4 3 3 5 4 0 5 ill remain perfectly affordable in he future
onrsquot know 38 19 29 29 39 20 26 34 19 21 4 28
Net
herl
ands
art 16 Products which protect against investment risk are the most important to young workers ( interested) Thinking about the types of financial products you could purchase to help provide you with security in retirement on a scale of 1 to 5
how interested are you in the following options G
erm
any
Swed
en
Uni
ted
Kin
gdom
ase 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 Fr
ance
100 100 100 100 100 100 100 100 100 100 100 100
product providing a guaranteed etirement income stream or 75 81 73 76 74 83 78 76 87 85 94 69
Spai
nifetime income in retirement
product which protects my 74 79 73 76 72 82 77 74 84 86 94 65 etirement income against inflation P
olan
d
product which guarantees that I 72 82 73 78 75 81 76 73 86 86 90 67 onrsquot lose my initial investment H
unga
ry product which helps meet the ost of long-term care if I become 74 79 74 77 70 79 76 71 86 85 84 66
Uni
ted
nable to look after myself St
ates
product which protects my capital 71 81 71 76 68 76 77 73 84 83 93 65 rom poor investment returns Ca
nada
product which generates a etirement income and allows 69 78 71 75 68 81 77 72 84 86 94 70 e to take a lump sum from the
Chin
anvestment should I need to
product where the annual 66 78 68 75 72 79 77 70 85 86 87 64 anagement charges are kept low Ja
pan
product which enables me to eep some control over how my 71 73 70 75 72 80 75 69 88 85 91 63 avings are invested during my etirement
product which manages the sset allocation so that I am never 68 70 67 73 66 76 71 67 80 83 95 60 xposed to a level of risk Irsquom not omfortable with
product which continues to rovide a retirement income to my 74 78 71 75 73 81 79 73 86 82 94 60 pouse in the event that I die first
product which protects my family gainst having to pay estate taxes 73 76 71 74 75 81 75 69 82 82 89 56 hen I die
product which locks in investment 72 71 63 73 64 71 59 56 81 84 89 61 eturns during the good years
Tbra
Tawt
D
ChQ
B
Arl
Ar
Ad
Acu
Af
Armi
Am
Aksr
Aaec
Aps
Aaw
Ar
The Young Pragmatic and Penniless Generation | 44
Chart 12 For young employees friends and family are the leading source of retirement savings information Q And which of these sources (of information) is most important to you
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
Bank adviser 6 11 19 5 25 5 7 4 3 17 10 2 N
ethe
rlan
dsN
ethe
rlan
dsProfessional financial adviser 12 22 10 12 10 19 19 22 21 25 19 10
Insurance agent spokesperson 3 10 2 3 1 3 6 2 3 0 3 2 G
erm
any
Ger
man
yInsurance company website 3 1 3 2 4 4 2 2 1 3 1
Personal finance websites online 8 5 7 8 5 4 10 8 12 6 10 8 retirement planning tools Sw
eden
Swed
enPersonal finance media 2 2 2 2 2 6 3 1 2 1 6 2
Government website 7 1 3 6 U
nite
d5 2 3 3 2 3 7 1
Uni
ted
Kin
gdom
Kin
gdom
Bank website 2 3 3 2 1 0 3 2 1 6 3 3
My employer 12 8 4 9 4 7 5 12 8 5 4 1 Fr
ance
Fran
ceAccountant 2 6 4 4 1 3 1 3 5 5 1 3
Lawyer 2 3 1 2 2 8 4 2 1 2 2 0 Sp
ain
Spai
nFriends and family 21 22 30 28 24 26 18 24 26 20 25 24
None of these P
olan
dP
olan
dNot applicable 21 7 16 18 19 13 17 15 14 9 5 41
Hun
gary
Hun
gary
Chart 13 Most young workers feel their employer should provide some kind of pension Q In the future what if anything should employers do to help people plan for retirement
Uni
ted
Uni
ted
Stat
esSt
ates
Cana
daCa
nada
Chin
aCh
ina
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 Ja
pan
Japa
n Employers should be required to 24 43 20 40 21 26 20 28 37 34 20 30 contribute to workersrsquo pensions
Employers should be required to make a pension available but not to 12 13 7 17 20 15 15 4 11 14 22 5 contribute into it
Employers should not be required to provide pensions but should 15 9 12 8 9 8 11 6 11 9 9 11 provide information on how to plan for retirement
Employers should provide a range of flexible benefits and 13 18 18 16 15 27 25 28 21 22 45 12 allow individuals to choose which benefits they actually want
Nothing ndash it should be left to individual employees to take care 2 2 5 1 4 3 3 5 6 5 1 9 of themselves
Nothing ndash it should be left to the government to take care of its 2 5 5 2 5 8 15 14 1 4 0 4 citizens
Donrsquot know 30 10 32 17 27 12 12 15 13 13 3 29
The Young Pragmatic and Penniless Generation | 42
Chart 14 Workplace pensions are relatively low down in young workersrsquo priorities when choosing a job Q How important to you would the following workplace benefits be if you were choosing your next job
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsBasic salary 86 93 88 91 88 92 90 94 90 93 96 94
Holiday entitlement 87 94 89 91 92 94 91 94 93 94 96 91 G
erm
any
Ger
man
yOvertime and bonus pay 86 93 87 88 89 90 89 94 90 91 97 90
Location of workplace 88 91 86 92 89 90 89 92 93 93 92 86 Sw
eden
Swed
enMedical health insurance 73 92 84 65 86 87 88 87 93 94 98 83
Opportunities for career progression 86 91 81 90 90 94 91 94 92 91 96 81 U
nite
dU
nite
dAccess to a workplace retirement 85 85 81 82
Kin
gdom
78 84 80 78 84 86 93 74 K
ingd
omplan with employer contributions
Access to good training provision 85 87 85 88 86 91 85 93 86 90 95 74 Fr
ance
Fran
ceFlexible working hours 79 87 58 86 81 89 81 87 91 91 92 57
Life insurance 72 75 79 69 80 82 Sp
ain
84 80 81 88 93 74 Sp
ain
(death in service benefits)
Phased retirement or other employer programs providing for 74 54 75 71 72 81 76 74 76 81 91 65
Pol
and
Pol
and
a transition into retirement
Ability to work past the normal 68 57 64 65 64 74 72 65 74 76 80 70 retirement age H
unga
ryH
unga
ry
Access to a workplace retirement 62 74 61 68 59 77 61 47 68 74 89 65 plan without employer contributions U
nite
dU
nite
dSt
ates
Stat
esEmployee share plans 50 72 54 65 59 73 61 51 64 73 91 55
Access to creche help with the 67 75 64 56 69 79 75 83 58 69 89 68 cost of childcare Ca
nada
Cana
da
Opportunities for foreign travel 53 54 60 55 50 71 58 66 57 61 79 37
Company car 51 46 45 47 49 63 51 49 36 49 69 Ch
ina
39 Ch
ina
Japa
n Ja
pan
Chart 15 Young workers think the state pension will need to be reformed Q With the cost of government pensions becoming a greater concern as people live longer which if any of the following do you think
the government should undertake
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
The government should reduce the overall cost of state pension 15 33 16 15 16 20 28 22 21 26 30 16 provision by reducing the value of individual pension plans
The government should increase overall funding available for the 12 21 30 22 14 34 19 26 21 18 29 10 state pension through raising taxes
43 | The Young Pragmatic and Penniless Generation
he government should take a alanced approach with some 27 26 12 30 28 23 24 16 34 31 38 41 eductions in individual payments nd some increases in tax
he government should not do nything State pension provision 7 2 12 5 3 4 3 3 5 4 0 5 ill remain perfectly affordable in he future
onrsquot know 38 19 29 29 39 20 26 34 19 21 4 28
Net
herl
ands
art 16 Products which protect against investment risk are the most important to young workers ( interested) Thinking about the types of financial products you could purchase to help provide you with security in retirement on a scale of 1 to 5
how interested are you in the following options G
erm
any
Swed
en
Uni
ted
Kin
gdom
ase 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 Fr
ance
100 100 100 100 100 100 100 100 100 100 100 100
product providing a guaranteed etirement income stream or 75 81 73 76 74 83 78 76 87 85 94 69
Spai
nifetime income in retirement
product which protects my 74 79 73 76 72 82 77 74 84 86 94 65 etirement income against inflation P
olan
d
product which guarantees that I 72 82 73 78 75 81 76 73 86 86 90 67 onrsquot lose my initial investment H
unga
ry product which helps meet the ost of long-term care if I become 74 79 74 77 70 79 76 71 86 85 84 66
Uni
ted
nable to look after myself St
ates
product which protects my capital 71 81 71 76 68 76 77 73 84 83 93 65 rom poor investment returns Ca
nada
product which generates a etirement income and allows 69 78 71 75 68 81 77 72 84 86 94 70 e to take a lump sum from the
Chin
anvestment should I need to
product where the annual 66 78 68 75 72 79 77 70 85 86 87 64 anagement charges are kept low Ja
pan
product which enables me to eep some control over how my 71 73 70 75 72 80 75 69 88 85 91 63 avings are invested during my etirement
product which manages the sset allocation so that I am never 68 70 67 73 66 76 71 67 80 83 95 60 xposed to a level of risk Irsquom not omfortable with
product which continues to rovide a retirement income to my 74 78 71 75 73 81 79 73 86 82 94 60 pouse in the event that I die first
product which protects my family gainst having to pay estate taxes 73 76 71 74 75 81 75 69 82 82 89 56 hen I die
product which locks in investment 72 71 63 73 64 71 59 56 81 84 89 61 eturns during the good years
Tbra
Tawt
D
ChQ
B
Arl
Ar
Ad
Acu
Af
Armi
Am
Aksr
Aaec
Aps
Aaw
Ar
The Young Pragmatic and Penniless Generation | 44
Chart 14 Workplace pensions are relatively low down in young workersrsquo priorities when choosing a job Q How important to you would the following workplace benefits be if you were choosing your next job
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100 N
ethe
rlan
dsN
ethe
rlan
dsBasic salary 86 93 88 91 88 92 90 94 90 93 96 94
Holiday entitlement 87 94 89 91 92 94 91 94 93 94 96 91 G
erm
any
Ger
man
yOvertime and bonus pay 86 93 87 88 89 90 89 94 90 91 97 90
Location of workplace 88 91 86 92 89 90 89 92 93 93 92 86 Sw
eden
Swed
enMedical health insurance 73 92 84 65 86 87 88 87 93 94 98 83
Opportunities for career progression 86 91 81 90 90 94 91 94 92 91 96 81 U
nite
dU
nite
dAccess to a workplace retirement 85 85 81 82
Kin
gdom
78 84 80 78 84 86 93 74 K
ingd
omplan with employer contributions
Access to good training provision 85 87 85 88 86 91 85 93 86 90 95 74 Fr
ance
Fran
ceFlexible working hours 79 87 58 86 81 89 81 87 91 91 92 57
Life insurance 72 75 79 69 80 82 Sp
ain
84 80 81 88 93 74 Sp
ain
(death in service benefits)
Phased retirement or other employer programs providing for 74 54 75 71 72 81 76 74 76 81 91 65
Pol
and
Pol
and
a transition into retirement
Ability to work past the normal 68 57 64 65 64 74 72 65 74 76 80 70 retirement age H
unga
ryH
unga
ry
Access to a workplace retirement 62 74 61 68 59 77 61 47 68 74 89 65 plan without employer contributions U
nite
dU
nite
dSt
ates
Stat
esEmployee share plans 50 72 54 65 59 73 61 51 64 73 91 55
Access to creche help with the 67 75 64 56 69 79 75 83 58 69 89 68 cost of childcare Ca
nada
Cana
da
Opportunities for foreign travel 53 54 60 55 50 71 58 66 57 61 79 37
Company car 51 46 45 47 49 63 51 49 36 49 69 Ch
ina
39 Ch
ina
Japa
n Ja
pan
Chart 15 Young workers think the state pension will need to be reformed Q With the cost of government pensions becoming a greater concern as people live longer which if any of the following do you think
the government should undertake
Base 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223
100 100 100 100 100 100 100 100 100 100 100 100
The government should reduce the overall cost of state pension 15 33 16 15 16 20 28 22 21 26 30 16 provision by reducing the value of individual pension plans
The government should increase overall funding available for the 12 21 30 22 14 34 19 26 21 18 29 10 state pension through raising taxes
43 | The Young Pragmatic and Penniless Generation
he government should take a alanced approach with some 27 26 12 30 28 23 24 16 34 31 38 41 eductions in individual payments nd some increases in tax
he government should not do nything State pension provision 7 2 12 5 3 4 3 3 5 4 0 5 ill remain perfectly affordable in he future
onrsquot know 38 19 29 29 39 20 26 34 19 21 4 28
Net
herl
ands
art 16 Products which protect against investment risk are the most important to young workers ( interested) Thinking about the types of financial products you could purchase to help provide you with security in retirement on a scale of 1 to 5
how interested are you in the following options G
erm
any
Swed
en
Uni
ted
Kin
gdom
ase 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 Fr
ance
100 100 100 100 100 100 100 100 100 100 100 100
product providing a guaranteed etirement income stream or 75 81 73 76 74 83 78 76 87 85 94 69
Spai
nifetime income in retirement
product which protects my 74 79 73 76 72 82 77 74 84 86 94 65 etirement income against inflation P
olan
d
product which guarantees that I 72 82 73 78 75 81 76 73 86 86 90 67 onrsquot lose my initial investment H
unga
ry product which helps meet the ost of long-term care if I become 74 79 74 77 70 79 76 71 86 85 84 66
Uni
ted
nable to look after myself St
ates
product which protects my capital 71 81 71 76 68 76 77 73 84 83 93 65 rom poor investment returns Ca
nada
product which generates a etirement income and allows 69 78 71 75 68 81 77 72 84 86 94 70 e to take a lump sum from the
Chin
anvestment should I need to
product where the annual 66 78 68 75 72 79 77 70 85 86 87 64 anagement charges are kept low Ja
pan
product which enables me to eep some control over how my 71 73 70 75 72 80 75 69 88 85 91 63 avings are invested during my etirement
product which manages the sset allocation so that I am never 68 70 67 73 66 76 71 67 80 83 95 60 xposed to a level of risk Irsquom not omfortable with
product which continues to rovide a retirement income to my 74 78 71 75 73 81 79 73 86 82 94 60 pouse in the event that I die first
product which protects my family gainst having to pay estate taxes 73 76 71 74 75 81 75 69 82 82 89 56 hen I die
product which locks in investment 72 71 63 73 64 71 59 56 81 84 89 61 eturns during the good years
Tbra
Tawt
D
ChQ
B
Arl
Ar
Ad
Acu
Af
Armi
Am
Aksr
Aaec
Aps
Aaw
Ar
The Young Pragmatic and Penniless Generation | 44
he government should take a alanced approach with some 27 26 12 30 28 23 24 16 34 31 38 41 eductions in individual payments nd some increases in tax
he government should not do nything State pension provision 7 2 12 5 3 4 3 3 5 4 0 5 ill remain perfectly affordable in he future
onrsquot know 38 19 29 29 39 20 26 34 19 21 4 28
Net
herl
ands
art 16 Products which protect against investment risk are the most important to young workers ( interested) Thinking about the types of financial products you could purchase to help provide you with security in retirement on a scale of 1 to 5
how interested are you in the following options G
erm
any
Swed
en
Uni
ted
Kin
gdom
ase 20-29 year olds 241 196 154 234 220 262 314 172 214 222 270 223 Fr
ance
100 100 100 100 100 100 100 100 100 100 100 100
product providing a guaranteed etirement income stream or 75 81 73 76 74 83 78 76 87 85 94 69
Spai
nifetime income in retirement
product which protects my 74 79 73 76 72 82 77 74 84 86 94 65 etirement income against inflation P
olan
d
product which guarantees that I 72 82 73 78 75 81 76 73 86 86 90 67 onrsquot lose my initial investment H
unga
ry product which helps meet the ost of long-term care if I become 74 79 74 77 70 79 76 71 86 85 84 66
Uni
ted
nable to look after myself St
ates
product which protects my capital 71 81 71 76 68 76 77 73 84 83 93 65 rom poor investment returns Ca
nada
product which generates a etirement income and allows 69 78 71 75 68 81 77 72 84 86 94 70 e to take a lump sum from the
Chin
anvestment should I need to
product where the annual 66 78 68 75 72 79 77 70 85 86 87 64 anagement charges are kept low Ja
pan
product which enables me to eep some control over how my 71 73 70 75 72 80 75 69 88 85 91 63 avings are invested during my etirement
product which manages the sset allocation so that I am never 68 70 67 73 66 76 71 67 80 83 95 60 xposed to a level of risk Irsquom not omfortable with
product which continues to rovide a retirement income to my 74 78 71 75 73 81 79 73 86 82 94 60 pouse in the event that I die first
product which protects my family gainst having to pay estate taxes 73 76 71 74 75 81 75 69 82 82 89 56 hen I die
product which locks in investment 72 71 63 73 64 71 59 56 81 84 89 61 eturns during the good years
Tbra
Tawt
D
ChQ
B
Arl
Ar
Ad
Acu
Af
Armi
Am
Aksr
Aaec
Aps
Aaw
Ar
The Young Pragmatic and Penniless Generation | 44